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Tapgerine LLC v. 50Mango Inc.

United States District Court, N.D. California

May 11, 2017

TAPGERINE, LLC, a Nevada limited liability company, and TAPMEDIA, LLC, a Ukraine limited liability company; Plaintiffs,
v.
50MANGO, INC., a Delaware corporation, and DOES 1-10; Defendants.

          ORDER GRANTING MOTION FOR SANCTIONS

          WILLIAM ALSUP UNITED STATES DISTRICT JUDGE

         INTRODUCTION

         Following voluntary dismissal of this trade secret misappropriation action, defendant moves for an award of attorney's fees. For the reasons stated below, the motion is Granted.

         STATEMENT

         This is a dispute between plaintiffs Tapgerine, LLC, and TapMedia, LLC, and defendant 50Mango, Inc. TapMedia is a Ukraine limited liability company with its principal place of business in Ukraine. Tapgerine is a Nevada limited liability company with its principal place of business allegedly in Las Vegas, and an office in Ukraine. Defendant 50Mango, Inc., is a Delaware corporation with its virtual principal place of business in Redwood City, California, and its only physical office in Ukraine.

         On November 8, 2016, plaintiffs commenced this civil action here in the district court in San Francisco, alleging misappropriation of trade secrets by 50Mango (Dkt. No. 1). Defendant moved to dismiss for failure to state a claim and based on forum non conveniens (Dkt. No. 17). In opposition to the motion to dismiss for forum non conveniens, plaintiffs asserted that all the sources of proof in this case were located in the United States and that Ukraine was too war-torn and unstable to provide an adequate remedy (Dkt. No. 21 at 8). In preparation for the hearing, scheduled for March 23, 2017, and to illuminate the actual extent to which the Ukrainian parties had any presence here in the United States, the Court sent out an order for supplemental evidence to be submitted by March, 16, 2017 (Dkt. No. 29). The purpose of this request was to corroborate the actual extent of any real presence in the United States of the parties, as claimed by counsel.

         Instead of providing the Court with photographic evidence of their presence here in the United States, plaintiffs voluntarily dismissed the action 21 days after the request was made (Dkt. No. 34). 50Mango then brought this motion for attorney's fees (Dkt. No. 37). Shortly after, 50Mango filed an administrative motion to continue the hearing on its motion in an attempt to remedy its failure to meet and confer in compliance with Local Rule 54-5 before making a motion for award of attorney's fees (Dkt. No. 39). The Court denied the administrative motion but reserved ruling on the real issue teed up by this dispute - whether 50Mango's failure to comply with our local rules warrants denial of its motion to attorney's fees - pending consideration of the motion on its merits (Dkt. No. 43). This order follows full briefing and oral argument.

         ANALYSIS

         1. Plaintiffs' Bad Faith.

         Both sides in this dispute are Ukraine businesses, although they each have tiny presences here in the United States. 50Mango contends that plaintiffs acted in bad faith when choosing the present forum and that the only basis for plaintiffs' choice was to force 50Mango to endure the expense and inconvenience of litigating in the United States, rather than in the actual situs of the parties and events - Ukraine.

         Under its inherent power, federal court's can levy sanctions, including attorney's fees, for bad faith. See Roadway Exp., Inc. v. Piper, 447 U.S. 752, 766-67 (2001); Chambers v. NASCO, Inc., 501 U.S. 32, 46 (1991). “Bad faith” encompasses a wide range of willful conduct, including “recklessness when combined with an additional factor such as frivolousness, harassment, or an improper purpose.” Fink v. Gomez, 239 F.3d 989, 994 (9th Cir. 2001). Whether to impose inherent power sanctions is “a determination that rests in the sound discretion of the district court.” Ibid.

         Before delving into the underlying arguments of the parties, this order will address Tapgerine's transparent attempt to distance itself from its purely Ukrainian co-plaintiff TapMedia for the purposes of this motion. Tapgerine - for the first time in this action - contends that “it is Tapgerine and not TapMedia that has primarily suffered from 50Mango's actions” (Dkt. No. 42-1 ¶ 10). Ironically, plaintiffs' complaint tells a different story. According to the complaint, 50Mango's principals were former employees of TapMedia, and furthermore, it was TapMedia's clients and proprietary software source code 50Mango allegedly attempted to misappropriate (Compl. ¶¶ 11-17). This order therefore will evaluate plaintiffs' bad faith in filing their complaint here in light of 50Mango's alleged conduct towards both Tapgerine as well as TapMedia.

         50Mango argues that even though plaintiffs were aware, prior to filing this suit, that all of the relevant people, documents, and other evidence were located in Ukraine, plaintiffs chose to proceed here. Moreover, 50Mango contends that, once challenged, “plaintiffs misled their counsel into believing 50Mango's server and relevant witnesses were located in the United States, in a belated attempt to justify their suit” (Dkt. No. 37 at 4).

         Plaintiffs counter that at the time of filing, they were completely unaware of 50Mango's presence in Ukraine since all of their information about 50Mango came from 50Mango's website. Plaintiffs further assert that as soon as they received information that the key ...


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