GSHC Surrogacy Agency LLC vs. Li

Plaintiff’s interest in its chosen counsel, Attorney Charleston, who actively participated in the underlying transaction and was extensively involved in this litigation since filing the action.

In summary, while the court ultimately was unpersuaded and did not find the weight of SFA’s evidence enough to warrant disqualification, there was at least minimal evidence to support each of the factors for disqualification.

Finally, the court cannot, on the record before it, find that there is sufficient evidence that the motion was filed for an improper purpose/motive. While the court did find that “Defendant’s lengthy delay in moving for disqualification supports a reasonable finding that this motion was made for tactical purposes” (Minute Order, dated 07/15/26), the court cannot find that the delayed filing shows the motion was filed for the purpose of harassment, causing unnecessary delay or needlessly increasing the cost of litigation. While SFA’s motion to disqualify did have those indirect consequences, there is insufficient evidence that the purpose of the motion was to directly cause said consequences. SFA’s counsel offers a declaration that the intent was to file the motion in good faith and the court accepts that testimony.

For these reasons, the motion is DENIED.

Plaintiff to give notice.

7 GSHC TENTATIVE RULING: Surrogacy Agency LLC For the reasons set forth below, the motion by Plaintiff/Cross- vs. Li Defendant GSHC Surrogacy Agency, LLC (“GSHC”) for attorneys’ fees is DENIED.

Fees Under CUTSA

GSHC moves for attorneys’ fees in the amount of $24,780.00 under Civil Code § 3426.4 as the prevailing party on a misappropriation of trades secret claim, which was allegedly made in bad faith.

Attorney’s fees are recoverable as costs, when authorized by contract, statute, or law. (Code Civ. Proc., § 1033.5(10)(A)-(C).) Defendants Sung Yoon Kim and Omniq, Inc. argue that Defendants are entitled to recover statutory fees pursuant to the California Uniform Trade Secrets Act (“CUTSA”). CUTSA provides that if “a claim of misappropriation is made in bad faith . . . the court may award reasonable attorney’s fees and costs [including expert fees] to the

prevailing party.” (Civ. Code, § 3426.4.) CUTSA “authorizes the trial court to award attorney fees as a deterrent to specious trade secret claims.” (FLIR Sys., Inc. v. Parrish (2009) 174 Cal.App.4th 1270, 1275; see Gemini Aluminum Corp. v. Cal. Custom Shapes, Inc. (2002) 95 Cal.App.4th 1249, 1261.) “Because the award is a sanction, a trial court has broad discretion in awarding fees.” (FLIR Sys., supra, 174 Cal.App.4th at p. 1275.)

Application of Civil Code section 3426.4 “naturally raises three questions: Is the defendant the prevailing party? Was the claim made in bad faith? And what is a reasonable fee?” (Cypress Semiconductor Corp. v. Maxim Integrated Prods., Inc. (2015) 236 Cal.App.4th 243, 253.) A defendant voluntarily dismissed from the action can be considered the prevailing party entitled to recover fees under CUTSA. (See, e.g., SASCO v. Rosendin Electric, Inc. (4th Dist.-Div. 3, 2012) 207 Cal.App.4th 837, as modified on denial of reh'g (Aug. 7, 2012).)

“Although the Legislature has not defined ‘bad faith,’ courts have developed a two-prong standard: (1) objective speciousness of the claim, and (2) [plaintiff’s] subjective bad faith in bringing or maintaining the action, i.e., for an improper purpose.” (FLIR Sys., Inc. v. Parrish (2009) 174 Cal.App.4th 1270, 1275; see also Gemini Aluminum Corp., supra, 95 Cal.App.4th at p. 1262.) “‘Objective speciousness exists where the action superficially appears to have merit but there is a complete lack of evidence to support the claim.’” (SASCO v. Rosendin Electric, Inc. (2012) 207 Cal.App.4th 837, 845 [citing FLIR Systems, supra, 174 Cal.App.4th at p. 1276].) The court can find a claim objectively specious, even where the case is dismissed prior to trial and prior to the completion of discovery. (SASCO, supra, 174 Cal.App.4th at p. 845.)

“Objective speciousness exists where the action superficially appears to have merit but there is a complete lack of evidence to support the claim.” (SASCO, supra, 207 Cal.App.4th at p. 845 [citing FLIR Systems, supra, 174 Cal.App.4th at p. 1276].) The court can properly find a plaintiff’s claim to be objectively specious, even where a case was dismissed prior to the completion of discovery and where the defendant is alleged to have withheld discovery. (Id., at p. 845.) Whether, objectively speaking, it appeared to the plaintiff at the time of filing that some evidence would be obtained in discovery to support a misappropriation claim is irrelevant to the court’s analysis. (Id. at pp. 847-848.)

Subjective bad faith means the action was commenced or continued for an improper purpose, such as harassment, unnecessary delay, or to thwart competition. (FLIR Systems, 174 Cal.App.4th at p. 1278; see

also SASCO, supra, 207 Cal.App.4th 837, 847; Gemini, supra, 95 Cal.App.4th at pp. 1264-1264.) Because there will rarely be direct proof of bad faith, the court may infer a plaintiff’s state of mind from circumstantial evidence. (Gemini, supra, 95 Cal.App.4th at p. 1263.) Bad faith “may be inferred where the specific shortcomings of the case are identified by opposing counsel, and the decision is made to go forward despite the inability to respond to the arguments raised.” (Id., at p. 1264.) An absence of evidence alone, however, is insufficient to support a finding of subjective bad faith. (SASCO, supra, 207 Cal.App.4th at p. 847 [noted in dicta].)

Bad Faith not Established

1. Objective Speciousness

GSHC argues that Cross-Complainants’ claims are objectively specious because Cross-Complainants never responded to GSHC’s pre-litigation letter, which asked Cross-Complainants for evidence of stolen files. Further, GSHC argues that the claims alleged against it are legally insufficient because all non-misappropriation claims were preempted by CUTSA and because the misappropriation claims did not specifically allege the protectable trade secrets.

The elements of a cause of action under the CUTSA are: (i) possession by the plaintiff of a trade secret; (ii) the defendant’s misappropriation of the trade secret, meaning its wrongful acquisition, disclosure, or use; and (iii) resulting or threatened injury to the plaintiff. (See Civ. Code, §§ 3426.1-3426.3.)

CUTSA defines a trade secret as “information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” (Civ. Code, § 3426.1(d).) Customer lists may, in certain circumstances, satisfy the definition of a trade secret. (See, e.g., Courtesy Temporary Service, Inc. v.

Camacho (1990) 222 Cal.App.3d 1278, 1287 [reversing the trial court’s denial of injunction based on its finding that plaintiff’s customer list was “not any secret”]; see American Paper & Packaging Products, Inc. v. Kirgan (1986) 183 Cal.App.3d 1318; Hofmann Corp. v. Superior Court (1985) 172 Cal.App.3d 357.) “A list of customers or subscribers ‘built up by ingenuity, time, labor and expense of the owner over a period of many years is property of the employer,’ and ‘ “[k]knowledge of such a list, acquired by an employee by reason of his employment, may not be

used by the employee as his own property or to his employer’s prejudice.”’” (Courtesy Temporary Service, supra, 222 Cal.App.3d at p. 1287 [citing Greenly v. Cooper (1978) 77 Cal.App.3d 382, 392].)

Here, Cross-Complainants offered evidence that Cross-Defendant Qimei Long signed an employment agreement with Plaintiff/Cross- Defendant GSHC, in which Long agreed that certain information would be kept confidential and that certain information would constitute trade secrets. Long then was employed by Plaintiff/Cross- Defendant. Cross-Complainants identify the information that they contend constitute trade secrets. (Cross-Complaint, ¶ 47). Cross- Complainants contend in their opposition that they dismissed the cross-complaint when they realized that they were not the holders of the alleged trade secrets.

This is sufficient to show that there is at least minimal merit to Cross-Complainants’ trade secrets claim such that it is not objectively specious. Indeed, while the court agrees with GSHC that this is a close call in that Cross-Complainants did not offer evidence of the misappropriation of trade secret in their opposition, objective speciousness alone is not sufficient to award fees under section 3426.4. GSHC must also show subjective bad faith as well.

2. Subjective Bad Faith

GSHC argues that Cross-Complainants’ subjective bad faith can be inferred from their failure to respond to a pre-litigation letter, their responses to discovery questions, in which Cross-Complainants responded with “N/A” and Cross-Complainants’ dismissal of the action without prejudice. The court does not find that such conduct establishes subjective bad-faith.

First, as to the pre-litigation letter that asks Cross-Complainants to provide evidence for their claims: Whether or not cross-complainants responded to the letter does not establish subjective bad faith. There is no duty to provide evidence to opposing counsel prior to litigation.

Second, as to the discovery responses, Cross-Complainants explain that after filing the cross-complaint, they realized that the wrong entity was named and that they do not hold the rights to the trade secrets. Reproductive Sciences Management Company, Inc. does not hold the fictitious business name rights to Physician’s Surrogacy, Inc. Rather, the fictitious business name rights is held by PS Company Management. The court accepts Cross-Complainants’ explanation for these discovery responses.

Finally, the voluntary dismissal of the cross-complaint without more does not suggest a subjective bad faith motive. The cross-complaint

was filed on January 15, 2026. Once Cross-Complainants realized their mistake, the cross-complaint was dismissed in March 2026. Only two months have passed before dismissal, which does not tend to show that Cross-Complainants were trying to use the cross-complaint as a means for harassment, unnecessary delay, or to thwart competition.

For these reasons, the motion is DENIED.

Cross-Complainants to give notice.

8 Hamidi vs. OFF CALENDAR Gordonstone & Tiles, Inc. 9 Mills vs. CONTINUED TO 9/9/26 Nexgen Air Conditioning and Heating, LLC 10 Rodriguez vs. TENTATIVE RULING: American Honda Motor For the reasons set forth below, the Motion to Tax Costs brought by CO., INC Defendant American Honda Motor Co., Inc. is GRANTED in part. The Court will tax $89.50 in costs incurred after March 19, 2026, from the Memorandum of Costs filed by Plaintiff Robert Andrew Rodriguez.

“[A] prevailing party is entitled as a matter of right to recover costs in any action or proceeding.” (Code Civ. Proc., § 1032, subd. (b).) Additionally, a “prevailing party” includes “the party with a net monetary recovery....” (Code Civ. Proc., § 1032, sub. (a)(4).)

In addition to the above, pursuant to Civil Code section 1794, subdivision (d), a prevailing buyer in a Song-Beverly action “shall be allowed by the court to recover as part of the judgment a sum equal to the aggregate amount of costs and expenses...determined by the court to have been reasonably incurred by the buyer in connection with the commencement and prosecution of such action.” (Civ. Code, § 1794, subd. (d).)

There is no dispute that Plaintiff is the prevailing party pursuant to the accepted section 998 Offer. (Declaration of Ashleigh K. Gideon (“Gideon Decl.”), ¶¶ 2-3, Ex. A [998 Offer, ¶ 2: “[Defendant] will also pay Plaintiff’s statutory costs and expenses under California Civil Code section 1794(d).... Plaintiff will be considered the prevailing party.”].)