Atty Freeman Tbd By Court

Motion

Cal. Super. - 6th Dist.February 3, 2020

OO 00 N N O n nm B R A W N = BN ND N N N N N N O N em e m e m e m e a e d e m e d p m e m NR NN O N Un Rs W N = O VO 0 N N N RE W N -- Oo Peter C. Freeman SBN 100744 Electronically Filed FREEMAN & ASSOCIATES, A Law Corporation by Superior Court of CA, 384 Forest Avenue, Suite 23A County of Santa Clara, Laguna Beach, CA 92651-2155 on 7/17/2020 3:36 PM peter@peterfreemanlaw.com Reviewed By: P. Lai Telephone: 949-341-0500 Case #20CV366238 Attorneys for Defendant and Cross-complainant, AXXERA, INC. SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SANTA CLARA - UNLIMITED DIVISION TEKFORCE CORPORATION, a corporation, ) Case No: 20CV366238 ) Plaintiff, ) NOTICE OF MOTION AND MOTION ) TO TAX COST BILL OF CROSS- \'2 ) DEFENDANT APPLIED MATERIALS, ) INC.; MEMORANDUM OF POINTS AXXERA, INC., a corporation, etc. et al., ) AND AUTHORITIES AND ) DECLARATION OF PETER C. Defendants. ) FREEMAN IN SUPPORT THEREOF ) ) Assigned to AND RELATED CROSS-ACTION ) Hon. Sunil R.Kulkarni ) Dept 8 TO THE HONORABLE SUNIL R. KULKARNI, AND TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on » 52020, at 9:00 a.m. in or as soon thereafter as the matter may be heard, Department 8 of the above-entitled Court, located at 191 North First Street, San Jose, California, 95113, Defendant and Cross-complainant Axxera, Inc. (“Axxera”), will and hereby does move, pursuant to Rule 3.1700(b) of the California Rules of Court, for an order taxing the following costs sought by Cross-defendant Applied Materials, Inc. (“Applied”): a. Item 10 - Attorneys Fees. - $23,344.47. Attorney’s fees sought by the Memorandum of Costs may be those fees which are “fixed without 1 AXXERA’S NOTICE OF MOTION AND MOTION TO TAX COSTS No wn oN Ww ~N Oo necessity of a court determination” as expressly noted in the Memorandum of Costs (Summary) form. Attorneys fees may not be awarded to a prevailing party under Civil Code Section 3426.4, without the Court’s determination of the exercise of bad faith by the party against whom such fees are sought. Attorneys fees awarded as costs must be both reasonable in amount and reasonably necessary to the conduct of the litigation. (Code of Civil Procedure Section 1033.5(¢c)(2). (3) and (5)). Cross-defendant Applied has not sought or obtained a determination of bad faith under CC Section 3426.4. The Summary Memorandum of Costs is insufficient to establish that each and every portion of the fees sought were reasonable in amount, or that the activities for which the fees are sought were reasonably necessary to the litigation. The Motion is based upon this Notice of Motion and Motion, the accompanying Memorandum of Points and Authorities, the accompanying Declaration of Peter C. Freeman, and on such other and further evidence and argument as may be presented at or before the hearing on this Motion. DATED: July 17, 2020 Respectfully sub FREEMAN & ASSOCI , ALC By: Peter C- Freeman, Attorneys for Defendant and Cross-complainant, AXXERA, INC. 2 AXXERA’S NOTICE OF MOTION AND MOTION TO TAX COSTS © 00 NN O N nn B R A W N BN N N N N N N N N m e em em e e e e e e QR NN A N Wn pbx W N N = O v 0 N N N p W N D Y = Oo MEMORANDUM OF POINTS AND AUTHORITIES L INTRODUCTION This action arises out of agreements for the provision of skilled labor, specifically experienced and technically advanced computer programmers, to Applied Materials, Inc. (“Applied”). Plaintiff Tekforce, Inc. (“Tekforce™), was contracted to locate and furnish the programmers required for the performance of the obligations of Defendant Axxera Inc. (“Axxera”) to Applied. The agreements included, infer alia, confidentiality and non-solicitation provisions. During the performance of services, a dispute regarding payment arose between Axxera. Tekforce alleges it was not paid by Axxera, and Axxera alleges that the contracts were violated by the Tekforce’s employees, in concert with Tekforce and/or Applied, utilizing confidential information developed by Axxera, eliminating Axxera’s expected profits from the Applied contract. Although commenced by Tekforce in Contra Costa County, the action was transferred to this court early this year, upon motion of Applied. In May, Applied filed a Motion for Judgment on the Pleadings. In June, Axxera dismissed its cross-complaint as to Applied, while Applied’s Motion was to be heard in late July. Applied seeks $23,344.47 in costs as statutory attorney’s fees under Civil Code Section 3426.4, following the dismissal by Axxera’s. | II. SUMMARY OF FACTS. Tekforce’s complaint, alleging non-payment by Axxera. After several procedural issues, Axxera answered the complaint in May 2018, and obtained leave of Court in January 2019 for the filing of its cross-complaint, following substitution of counsel. Not named in the cross-comlaint, Applied was served as a Roe cross-defendant, and answered in May 2019. Additional individual cross-defendants were added by Axxera in October 2019. Applied’s Motion to Transfer Venue was heard and granted in November, with an order issued in December 2019. Formal notice of the Order was electronically served in January 2020 On May 11, 2020, this Court filed and served Notice of Transfer of the matter from Contra Costa County file. On May 22, Applied filed its Motion for Judgment on the Pleadings, and served notice of a hearing on July 2, 2020 (however, at the time of its filing, May 22, 2020, the Court changed the hearing date to July 28, 2020). On June 18, 2020, Axxera filed its Request for 3 AXXERA’S NOTICE OF MOTION AND MOTION TO TAX COSTS NO 0 NN O n n B A W N = N O N N N N N N N N me e m e m e m e m e a ee t pe e t 00 NN O N Wn Pb W N = O O 0 N N R W ND = Oo Dismissal of the Cross-complaint as to Applied. On July 2, 2020, Applied filed its summary Memorandum of Costs and with the supporting Declaration of attorney Jon Michaelson. II. ARGUMENT 1. A Motion to Tax Costs is appropriate to dispute elements of costs sought by in the prevailing party’s cost memorandum. Rule 3.1700(b) of the California Rules of Court authorizes the filing of a motion to dispute particular items sought as costs in a memorandum of costs. Any motion to tax costs must be directed to the specific or particular items in the cost memorandum and state why each is objectionable. CRC 3.1700(b)(2). Axxera’s Motion properly disputes the claim for attorneys fees as costs under Item 10 of the Memorandum of Costs (Summary), on the basis that a fee request made as part of a summary cost memo cannot include fees for with the amount or entitlement must be determined by the court. As set forth in the following arguments, any award of fees to Applied is subject to the Court’s determination that the action against Applied was specious and maintained in bad faith, and the further determination that the fees sought are reasonable and were reasonably necessary to the conduct of the litigation. 2. Attorneys fees allowable under a Memorandum of Costs must be in an amount set by statute or contract. If the amount must be determined, an application or motion is required. Judicial Council Form MC-010 (“Memorandum of Costs (Summary)”) specifically provides in Item 10: “Attorney fees (enter here if contractual or statutory attorney fees are fixed without necessity of a court determination; otherwise a noticed motion is required).” (emphasis added). This wording of the form follows the requirements of CCP § 1033.5(c)(5)(A): Attorney’s fees allowable as costs pursuant to subparagraph (B) of paragraph (10) of subdivision (a) [attorney fees allowed by statute] may be fixed as follows: (i) upon a noticed motion; . . . (iii) upon application supported by affidavit made concurrently with a claim for other costs . . . The claim for recovery of attorneys fees as the prevailing party is based on the Uniform 4 AXXERA’S NOTICE OF MOTION AND MOTION TO TAX COSTS Oo 0 N N N nh A W N N O N N O N O N O N O N N O N = mm e m e m e m e t e e e m e m 00 NJ S N Un Bs W N = O Y O N YY R A W Ny y = O Trade Secrets Act, CC § 3426.4. (See Declaration of Jon Michaelson in Support of Memorandum of Costs, p.2, 11. 10-11.) While the UTSA permits an award of fees to a prevailing party, it does not set or specify an amount for any such award, as contemplated by the use of MC-010. Applied has filed form MC-010 seeking recovery of its costs, including $23,344.37 in attorneys fees, based upon the alleged availability of such fees under a statute. Because Section 3426.4 does not specify an amount for fees (and requires other determinations as set out following), and the provisions for recovery of attorneys fees as costs under CCP Section 1033.5 requires a noticed motion or application and affidavit, Applied’s inclusion of attorneys fees on form MC-010, is not appropriate. The Memorandum and supporting Declaration fails to meet any procedural requirements for, or substantiate the amount, reasonableness of, or reasonable necessity of the fees sought, under both CC Section 3426.4 and CCP Section 1033.5, and the fees sought cannot be awarded on the Memorandum submitted. 3. Reasonable Attorney fees are available under the UTSA upon a finding of bad faith and a determination of the reasonableness of the fees sought. CC § 3426.4 authorizes a discretionary award of reasonable attorneys fees upon a finding, inter alia, that a claim of misappropriation was made in bad faith. It is not simply enough that a party is a ‘prevailing party’ under CCP § 1032 - in the case of a defendant as prevailing party, the defendant must show that the claim was objectively specious and that the plaintiff subjectively harbored bad faith. Sasco v. Rosendin Electric, Inc. (2012) 207 Cal.App.4th 837, 847-849. Where costs are not proper on their face, an objection places the disputed items in issue, and the burden of proof is on the party claiming them. See Ladas v. California State Auto Ass'n (1993) 19 Cal.App.4th 761. Because Section 3426.4, the authorizing statute, does not provide for an amount of fees on its face, and requires a determination as to both entitlement and amount, Applied’s request for fees is not proper on its face, and the burden shifts to Applied to support such claims. Applied must also comply with the statutory scheme for seeking such costs under CCP § 1033.5. Although an award of fees under Section 3426.4 must be premised upon a determination of 5 AXXERA’S NOTICE OF MOTION AND MOTION TO TAX COSTS OO 0 1 O N nh B A W N = N o N o No No No No N o N o N o - p- - - - - - - - - o o ~ aN Wn HS ww N y = oO Oo 0 ~~ oN wn FE N Ww ND - oO a specious claim and subjective bad faith, Applied has neither sought nor obtained a determination of Axxera’s bad faith. Filed in support of its Memorandum of Costs is the Declaration of attorney Michaelson in which he asserts that Axxera acted in “bad faith”, by the alleged failure to respond to a discovery request and failure to oppose the Motion for Judgment on the Pleadings. These conclusory allegations are insufficient to support the required finding. Those allegations are also disputed. (See attached Declaration of Peter C. Freeman). Specific facts and information is required to support any finding of bad faith, and it is Applied’s burden to substantiate its claim since a proper objection to the unsupported fee claim has been made. In addition to the shifting of the burden, it cannot be questioned that Axxera should be fully informed of, and have the opportunity to respond to, the evidence and arguments offered in support of the request for fees. That is accomplished through a noticed motion, as contemplated by the statutes. Axxera’s rights are denied should it be required to controvert the claims set out only in Applied’s Memorandum of Costs and Declaration, which contain insufficient evidence or argument to enable a complete response. The Court has simply not been presented with sufficient evidence to allow it to make any determination on the issue of bad faith, and Axxera has not been afforded any reasonable opportunity to contest Applied’s claims. On this basis alone, the Court should deny the fee claim and tax the cost item in its entirety. 4, Applied’s Memorandum of Costs and supporting Declaration fail to meet statutory requirements, and the costs of Item 10, Attorneys Fees, must be taxed entirely. In addition to the determination required by CC § 3426.4, any award of statutory attorneys fees must also be based upon the reasonableness of the fees sought, and the reasonable necessity of such fees in the litigation. CC § 3426.4 and CCP § 1033.5(c)(2)-(3). The procedure for seeking attorneys fees available under statute is CCP § 1033.5, and requires a motion or application supported by affidavit. Attorney Michaelson’s declaration does not offer any detail supporting the activities undertaken, the time incurred, the rates applied, the attorneys providing the services, etc. The declaration makes only passing reference to the fees 6 AXXERA’S NOTICE OF MOTION AND MOTION TO TAX COSTS No wn 0) OO 0 9 Oo sought being related only to fees incurred relating to the misappropriation of trade secrets claim of Axxera, and no other portions (Michaelson Dec., 2:3-10), but does not explain how that was determined, and what other efforts and time were not included. These explanations fail to meet even the basic substantive requirements for a fee award under both the USTA and CCP § 1033.5 and afford no factual basis on which the Court might make necessary findings. With no evidentiary basis for any finding that of the reasonableness of the fee amount sought. Therefore, the attorneys fees sought should be taxed, in full. IV. CONCLUSION The attorneys fees sought by Applied in its Memorandum of Costs are not appropriate for inclusion in a Memorandum of Costs, because they are subject to a determination by the Court. For this reason, the fees sought cannot be awarded on the Memorandum of Costs and supporting declaration. Axxera’s objection by this motion shifts the burden of proof. The statutory scheme for attorneys fees recoverable per a statute requires that such fees be sought by a motion or application. The USTA further requires a determination that the trade secret claim was objectively specious and Axxera harbored subjective bad faith, Applied must demonstrate the reasonableness of the fees and that they were reasonably necessary to the litigation. Applied’s Memorandum of Costs does not meet these requirements, and improperly seeks fees without compliance with the statutory requirements. For these reasons, the Court is requested to tax the amount submitted by Applied in Item 10 of its Memorandum of Costs, “Attorneys Fees” in full. Dated: July 17, 2020 Respectfully gubmitged, FREEMAN & ASSOCIATES, ALC Petes€. Freeman, Attorneys for Defendant and Cross- complainant, AXXERA, INC. 7 AXXERA’S NOTICE OF MOTION AND MOTION TO TAX COSTS 39 LI OS OO 0 N N Wn Bs ro No No wl PROOF OF SERVICE AND CERTIFICATION [ am employed in the County of Orange, State of California. Iam over the age of 18 and am not a party to the within action; my business address is 384 Forest Ave., Suite 23A, Laguna Beach, California 92651-2155. (For Messenger) my business address is On July 17, 2020, I served the foregoing document(s) described as NOTICE OF MOTION AND MOTION TO TAX COSTS on all INTERESTED PARTIES in the action by placing [ | the original [X] a true copy thereof addressed as follows: SEE ATTACHED MAILING LIST (By [] U.S. Mail/ By [_] Express Mail) The sealed envelope with postage thereon fully prepaid was placed for collection and mailing following ordinary business practice. | am aware that on motion of the party served, service is presumed invalid if the postage cancellation date or postage meter date on the envelope is more than one day after the date of deposit for mailing set forth in this declaration. I am readily familiar with the practice of FREEMAN & ASSOCIATES, ALC for collection and processing of documents for mailing with the United States Postal Service and that the documents are deposited with the United States Postal Service the same day as the day of collection in the ordinary course of business. (By Federal Express or Overnight Service) I deposited the sealed envelope in a box or other facility regularly maintained by the express service carrier or delivered the sealed envelope to an authorized carrier or driver authorized by the express carrier to receive documents. (By Facsimile Transmission) On at at approx .m. at Laguna Beach, California, I served the above-referenced document on the above-stated addressee(s) by facsimile transmission pursuant to Rule 2008 of the California Rules of Court. The telephone number(s) of the sending facsimile machine was (949) 341-0505, and the telephone number of the receiving facsimile was X (Via Electronic Service) Based on a court order or an agreement of the parties to accept service by electronic transmission, I caused the documents to be sent to the person at the electronic notification address listed above, and/or by electronically transmitting such document in .pdf format to the authorized electronic service provider, One Legal, which re-served the same, pursuant to CRC Rule 2.251(2)(B) to the parties at the addresses s n above. I declare under penalty of perjury under the laws of the State of California t correct. Executed on July 17, 2020, at Laguna Beach, California. the forgoing is true and Peter C. Freeman" 8 AXXERA’S NOTICE OF MOTION AND MOTION TO TAX COSTS OO 0 1 O N Wn hs W N N O N N N N N N N N mm e m e m e m p e e s pm p m pe 0 ~~ O N Un B W N = C D R N N N E W N = O SERVICE LIST TEKFORCE CORPORATION v. AXXERA, INC. SCSC Case No. 20CV366238CIVMSC16-02114 COUNSEL Lorna Walker, Esq. Daniel Frankston, Esq. The Law Offices of SWEET & WALKER, P.C. 2380 Junipero Serra Boulevard, Suite B Daly City, CA 94015 Jon Michaelson, Esq. KILPATRICK TOWNSEND & STOCKTON LLP 1080 Marsh Road Menlo Park, CA 94025 Mehrnaz Boroumand Smith, Esq. Gregory P. Farnham, Esq. KILPATRICK TOWNSEND & STOCKTON LLP Two Embarcadero Center, Suite 1900 San Francisco, CA 94111 Lav Patel 3932 Adams #5 Kansas City, Kansas 66103 Telephone/Fax Party Represented (415) 334-1600 Telephone (415) 334-0855 Fax email: mail@sweetwalker.com Attorneys for Plaintiff TEKFORCE CORPORATION (650) 326 2400 Telephone (650) 326 2422 Fax email: JMichaelson@kilpatricktownsend.com Attorneys for Cross-Defendant APPLIED MATERIALS, INC. (415) 576 0200 Telephone (415) 576 0300 Fax email: mboroumand@kilpatricktownsend.com; gfarnham@kilpatricktownsend.com Attorneys for Cross-Defendant APPLIED MATERIALS, INC. Cross-defendant, in pro per 9 AXXERA’S NOTICE OF MOTION AND MOTION TO TAX COSTS