Envtl. Logistics, Inc. v. Hayward

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ENVIRONMENTAL LOGISTICS, INC., et al., Plaintiffs and Appellants, v. ROBERT HAYWARD et al., Defendants and Respondents.

D080515

California Court of Appeals, Fourth District, First Division

August 25, 2023

NOT TO BE PUBLISHED

APPEAL from a judgment and orders of the Superior Court of San Bernardino County, No. CIVDS1600695 David Cohn, Judge. Affirmed.

Fennemore and Kevin Abbott for Plaintiffs and Appellants.

Tundis &Lester, Mark John Tundis and Alex D. Lester for Defendants and Respondents Robert Hayward, Carol Suzette Hayward and HEC, Inc.

Disenhouse Law, Bruce E. Disenhouse and Gary O. Poteet, Jr. for Defendant and Respondent Michael Tabush.

No appearance for Defendant and Respondent Suzann Alvarez.

No appearance for Defendant and Respondent Ernesto Alvarez.

MCCONNELL, P. J.

Environmental Logistics, Inc. (ELI), Filter Recycling Services, Inc. (FRS) and Variety Employment Corporation (VEC) (sometimes collectively, Plaintiffs) work in tandem in the hazardous waste industry: ELI treats and transports hazardous waste FRS stores and recycles it, and VEC provides ELI and FRS with employees in return for a percentage of profits. In this action, Plaintiffs sued multiple defendants including three of VEC's former employees, Robert Hayward (R. Hayward), Michael Tabush (Tabush), and Ernesto Alvarez (E. Alvarez), alleging that, while employed by VEC, they interfered with current and future customer relationships of ELI and/or FRS and misappropriated trade secrets and other confidential information. Plaintiffs sought damages in excess of $37.55 million.

After weeks of trial, at the end of Plaintiffs' case-in-chief, R. Hayward, his wife defendant Carol Suzette Hayward (C. Hayward), and his company defendant HEC, Inc. (collectively Hayward), Tabush, and E. Alvarez and his wife defendant Suzanne Alvarez (S. Alvarez)^[1] (sometimes collectively, Defendants), separately moved for nonsuit on all causes of action. Their nonsuit motions followed an Evidence Code section 402 hearing in which the trial court excluded the opinions of Plaintiffs' damages expert. As a result and for other reasons, the court granted Defendants' nonsuit motions as to all causes of action. In posttrial motions, the court awarded Hayward attorney fees and costs, and denied in part Plaintiffs' motion to tax Tabush's expert witness fees.^[2]

On appeal, Plaintiffs raise a series of contentions in support of their reversal of the judgment and postjudgment motions. Among others, they contend the trial court prejudicially erred when it: (1) granted the motions in limine of Hayward and Tabush to exclude Plaintiffs' waste management expert, after it found Plaintiffs had acted unreasonably in waiting until the eve of trial to make him available for a deposition; (2) excluded the opinions of Plaintiffs' damages expert based on its finding there was no "nexus" between Plaintiffs fact of injury and resulting damages and Defendants' acts; (3) excluded hundreds of pages of documents attached to three e-mails between R. Hayward and a competitor of Plaintiffs; (4) refused to allow Plaintiffs to reopen their case-in-chief before granting Defendants' nonsuit motions; and (5) granted Hayward's attorney fees motion and denied in part Plaintiffs' motion to tax Tabush's expert fees.

As we explain, we conclude the trial court properly exercised its discretion when it excluded Plaintiffs' waste management expert, the opinions of their damages expert, and the documents attached to the e-mails. We further conclude the court did not err in refusing to allow Plaintiffs to reopen their case-in-chief; and in awarding Hayward attorney fees and denying in part Plaintiffs' motion to tax Tabush's expert fees.

I. FACTUAL AND PROCEDURAL BACKGROUND

In reviewing a judgment based on a nonsuit motion brought at the conclusion of a plaintiff's case-in-chief, we must accept as true the evidence most favorable to the plaintiff and disregard any conflicting evidence. (See Nally v. Grace Community Church (1988) 47 Cal.3d 278, 291 (Nally); see also Alpert v. Villa Romano Homeowners Assn. (2000) 81 Cal.App.4th 1320, 1328 (Alpert) [noting a nonsuit motion operates as a "demurrer" to a plaintiff's evidence].)

With this standard in mind, we turn first to Plaintiffs' operative complaint.

A. First Amended Complaint (FAC)

Plaintiffs alleged R. Hayward, Tabush, and E. Alvarez, as employees of VEC, had access to Plaintiffs' "proprietary and confidential information," including "confidential customer lists, confidential proprietary procedures, processes, and methods for operation of a hazardous waste cleanup business, confidential pricing information, confidential approved facilities, vendors, and subcontractors information and their negotiated pricing (hereinafter, 'Trade Secrets')[.]" Plaintiffs further alleged these employees misappropriated their Trade Secrets and other confidential information by operating a competing business servicing both current and future customers of ELI and/or FRS.

The FAC also alleged R. Hayward, Tabush, and E. Alvarez had access to the "personal property" of ELI and/or FRS including "specialty custom-made forms and templates," "customers' data info, manuals, and other documents, as well as various hazardous waste cleanup supplies." Plaintiffs alleged R. Hayward "stole the supplies and the forms, E. Alvarez stole the forms, and M. Tabush broke into a locked office and stole" customers' information and other proprietary information; and then used this information to "divert[ ] current and future business of Plaintiffs" to a competitor.

Plaintiffs further alleged R. Hayward took personal property belonging to ELI and/or FRS, used it while employed by VEC to conduct a competing business, and returned the property, some of which he damaged, when he left VEC in early January 2016; and that R. Hayward and others named in the FAC, including former defendant Emiterio Mark Alvarez (M. Alvarez),^[3]created a new business^[4] and, between September 2013 and August 2014, diverted projects from ELI and/or FRS to this competitor.

Plaintiffs asserted causes of action for conversion, misappropriation of Trade Secrets, and unfair competition against Defendants (i.e., Hayward, Tabush, E. Alvarez, and S. Alvarez). ELI and FRS separately asserted causes of action for trespass to chattels and intentional interference with prospective economic advantage against Defendants; and VEC, for itself only, asserted a breach of contract cause of action against former employees R. Hayward, Tabush, and E. Alvarez. Plaintiffs sought punitive damages against Defendants on each of their tort-based causes of action.

In their first cause of action for conversion, Plaintiffs alleged Defendants "substantially interfered" with Plaintiffs' personal property including custom-made forms and templates and property used in the cleanup of hazardous waste by wrongfully taking possession of such property and/or destroying it. Plaintiffs sought compensatory damages "in excess of $260,000" (emphasis omitted).

In their second cause of action for trespass to chattels, ELI and FCS alleged Defendants intentionally and substantially interfered with their personal property including "first responder vehicles with special equipment," cell phones and computers, and hazardous waste cleanup gear. ELI and FCS sought compensatory damages "in excess of $282,400" (emphasis omitted).

In their third cause of action for interference with prospective economic advantage, ELI and FRS alleged Defendants intentionally interfered with Plaintiffs' economic relationships with current and future customers. ELI and FRS sought compensatory damages "in excess of $37,550,000" (emphasis omitted); and injunctive relief and "other remedies" "[i]n the alternative."

In their fourth cause of action for misappropriation of Trade Secrets, Plaintiffs alleged Defendants improperly acquired, disclosed, and/or used Plaintiffs' Trade Secrets; that Defendants' misappropriation was "willful and malicious"; that they were damaged "in excess of $37,550,000" (emphasis omitted); and that they also were entitled to injunctive relief and "other remedies."

VEC in its fifth cause of action asserted R. Hayward, Tabush, and E. Alvarez separately breached their written confidentially agreements by disclosing "proprietary information of Plaintiffs," causing Plaintiffs to sustain damages "in excess of $37,550,000" (emphasis omitted).

Finally, Plaintiffs alleged in their unfair competition cause of action (Bus. &Prof. Code, § 17200 et seq.) (UCL) that Defendants engaged in unfair competition and unlawful business practices as described in their other causes of action. Plaintiffs sought injunctive relief, restitution of all monies, and disgorgement of any profits made by Defendants.

B. Plaintiffs' Case-in-chief

Jon Bennett, the president of FRS and VEC and former president of ELI, testified VEC hired R. Hayward as a field technician in about 2008 and subsequently promoted him to project manager. As project manager, R. Hayward met with regulators and acted as a contact person for Plaintiffs' current and future customers. R. Hayward worked for VEC until January 8, 2016.

On the last day of his employment, R. Hayward returned his company truck, cell phone, and fuel card, and cleaned out his office. Bennett saw R. Hayward in possession of a binder containing "[h]undreds of business cards" of "customers and potential customers" of ELI and/or FRS. Written on some of these cards was customer information including waste streams and rates. Bennett occasionally had used these business cards to call customers of ELI and/or FRS. Bennett took possession of the binder and another manual, locked them inside R. Hayward's former office, and drove R. Hayward home.

Tabush...