## Facts

- Taskmaster developed and marketed a “Taskmaster workbench” and obtained large purchase orders from Makita.
- Taskmaster hired Gemini Aluminum Corporation to extrude and powder-coat aluminum parts for the workbenches.
- Gemini subcontracted powder-coating work to California Custom Shapes, Inc. (CCS).
- CCS reported defects in coated parts; CCS and Gemini disputed responsibility. CCS stopped coating the parts and placed Gemini on credit hold.
- Gemini stopped doing business with Taskmaster after Taskmaster accumulated a large unpaid balance.
- CCS later supplied coated parts directly to Taskmaster; Gemini claimed CCS used Gemini’s Taskmaster-related customer and pricing information and interfered with Gemini’s business expectancy.
- CCS eventually ceased supplying Taskmaster after learning Taskmaster could not pay; Taskmaster later filed bankruptcy.
- Gemini sued CCS for intentional interference with prospective economic advantage and misappropriation of trade secrets under the California Uniform Trade Secrets Act (CUTSA).
- The jury found for CCS on both claims. The trial court then awarded CCS $160,200 in attorney’s fees under Civil Code § 3426.4, finding Gemini pursued the trade-secret claim in bad faith.

## Issues

1. Whether jury instructions improperly imposed a duplicative burden on Gemini to prove “wrongful” conduct both as an element of intentional interference with prospective economic advantage and to defeat CCS’s competition privilege defense.
2. Whether the court erred by defining “wrongful” conduct, for competition-privilege purposes, as conduct independently actionable as a tort (including trade-secret misappropriation).
3. Whether the trial court abused its discretion in awarding attorney’s fees under Civil Code § 3426.4 based on a finding that Gemini litigated the trade-secret claim in bad faith, and what “bad faith” requires.

## Decision

- The judgment for CCS on the intentional interference claim was affirmed.
- Any claimed instructional error regarding “wrongful” conduct and the competition privilege was not prejudicial because the jury found no trade-secret misappropriation, eliminating Gemini’s asserted wrongful act.
- The postjudgment order awarding CCS $160,200 in attorney’s fees under Civil Code § 3426.4 was affirmed.
- The matter was remanded for the trial court to determine CCS’s entitlement to attorney’s fees incurred on appeal.

## Legal Principles

- Intentional interference with prospective economic advantage requires conduct that is “wrongful by some legal measure other than the fact of interference itself”; competition alone is not enough.
- The competition privilege protects efforts to obtain business through lawful competition; the privilege is defeated only by independently wrongful conduct.
- Under Civil Code § 3426.4, a prevailing party may recover reasonable attorney’s fees in a trade-secret action if a misappropriation claim or defense is made or resisted in bad faith.
- “Bad faith” under § 3426.4 involves both (1) objective baselessness of the claim or defense and (2) subjective improper purpose; a claim may support fees where it lacks evidentiary support and is pursued for retaliatory or improper reasons.

## Conclusion

The court affirmed a defense verdict on interference and a substantial CUTSA fee award, holding that interference liability requires independently wrongful conduct and that § 3426.4 permits fees when a trade-secret claim is objectively unsupported and pursued for an improper purpose.


Gemini Aluminum Corp. v. Cal. Custom Shapes, Inc., 95 Cal. App. 4th 1249 (Ct. App. 2002)