Harvey Barnett, Inc. v. Shidler

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES CO URT O F APPEALS
August 15, 2006
TENTH CIRCUIT Elisabeth A. Shumaker
Clerk of Court

HARVEY BARNETT, INC., a Florida
corporation; IN FA N T SWIM M ING
RESEARCH, INC., a Florida
corporation,

Plaintiffs-Appellants/Cross-
Appellees,
v. Nos. 04-1221 & 04-1222
ANN SHIDLER, d/b/a Infant Aquatic (D.C. No. 00-F-731 (OES))
Survival; ALISON GEERDES, d/b/a (D. Colorado)
Infant Aquatic Survival,

Defendants-Appellees,

and

JUDY HEUM ANN, d/b/a Infant
Aquatic Survival,

Defendant-Appellee/Cross-
Appellant.

OR D ER AND JUDGM ENT *

Before H ENRY, BRISCO E, and LUCERO, Circuit Judges.

*
This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. The court generally
disfavors the citation of orders and judgments; nevertheless, an order and
judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
 Harvey Barnett, Inc. and Infant Swimming Research, Inc. (collectively

“ISR”) filed a complaint against former employees Judy Heumann, Ann Shidler,

and Alison Geerdes, asserting, among other claims, that the employees

misappropriated ISR’s trade secrets and breached a license agreement which

contained a covenant not to compete and a confidentiality provision. In a prior

appeal, this court affirmed in part, and reversed in part, the district court’s grant

of summary judgment in favor of Heumann, Shidler, and Geerdes, and remanded

the case. Harvey Barnett, Inc. v. Shidler, 338 F.3d 1125 (10th Cir. 2003)

(hereinafter “Harvey I”). Following a six-day trial on remand, a jury found that

Heumann and Shidler breached the license agreement’s confidentiality provision,

but found that they neither misappropriated ISR’s trade secrets, nor breached the

license agreement’s covenant not to compete. The jury absolved Geerdes of any

liability. The district court subsequently awarded ISR and Geerdes attorney fees

and costs under the prevailing party provision of the license agreement, and

granted ISR a permanent injunction against Heumann and Shidler.

On appeal, ISR challenges the district court’s calculation of its attorney

fees, Geerdes’s status as a prevailing party entitled to attorney fees under the

license agreement, as well as the scope of the district court’s permanent

injunction against H eumann and Shidler. Heumann cross appeals, arguing, in

essence, that the district court should have dismissed ISR’s breach of

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confidentiality claim in light of the jury’s finding that she did not misappropriate

ISR’s trade secrets. Shidler has not cross-appealed and does not participate in

this appeal in any w ay. 2 Exercising jurisdiction pursuant to 28 U.S.C. § 1291, w e

AFFIRM the jury’s verdict against H eumann, the district court’s decision to

award attorney fees to Geerdes as a prevailing party under the license agreement,

and the scope of district court’s permanent injunction against Heumann and

Shidler. W e REVERSE the district court’s award of attorney fees to ISR and

REM AND for further proceedings consistent w ith this opinion.

I.

As the parties are well aware of the facts of the case, we will not repeat

them here in any detail. 3 In April 2000, ISR filed a complaint against Heumann,

Shidler, and Geerdes, former ISR swimming instructors trained by ISR to teach

the ISR swimming program, a collection of methods, procedures, and techniques

for teaching infants and young children aquatic survival and related aquatic skills.

ISR sought damages and injunctive relief based on allegations that the three

2
Heumann and Geerdes are represented by the same attorneys on appeal as
represented them before the district court. Shidler was also represented by said
attorneys until January 4, 2005, when we granted Shidler’s attorneys’ m otion to
withdraw as Shidler’s counsel. The record indicates that since that time no other
attorney has entered an appearance or filed a brief on her behalf.
3
Anyone wanting additional factual background is referred to Harvey I, as
well as the district court’s decision denying ISR’s motion for a preliminary
injunction, Harvey Barnett, Inc. v. Shidler, 143 F. Supp. 2d 1247 (D. Colo. 2001).

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former employees started a new business attempting to teach the ISR program

without ISR’s authorization. Specifically, ISR’s amended complaint raised state

law claims of misappropriation of trade secrets, breach of contract, and unjust

enrichment; claims for unfair competition and deceptive trade practices under the

Colorado Consumer Protection Act (“CCPA”), Colo. Rev. Stat. § 6-1-101, et.

seq.; and federal claims for trademark infringement and misleading trade practices

under the Lanham Act, 15 U.S.C. §§ 1114 and 1125. In response to ISR’s

complaint, Heumann, Shidler, and Geerdes filed several counterclaims.

In January 2002, the district court granted summary judgment in favor of

Heumann, Shidler, and Geerdes on all of ISR’s claims against them. Shortly

thereafter, the district court granted Heumann, Shidler, and Geerdes’s joint

motion to voluntarily dismiss their counterclaims against ISR. ISR appealed the

district court’s grant of summary judgment, and this court affirmed the summary

judgment entered in favor of H eumann, Shilder, and Geerdes on ISR’s unjust

enrichment claim and its claims under the CCPA and Lanham Act. Harvey I, 338

F.3d at 1136. However, we reversed the district court’s grant of summary

judgment on ISR’s misappropriation of trade secret claims, as w ell as on its

breach of contract claims based on the parties’ license agreement which contained

a covenant not to compete and a confidentiality provision. Id.

After a six-day jury trial on the remanded claims, a jury returned a special

verdict finding that: (1) ISR possessed information that constituted a trade secret;

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(2) none of the former employees misappropriated ISR’s trade secrets; (3)

Heumann and Shidler breached the confidentiality provision of the license

agreement; and (4) Shidler and Heumann w ere each liable for $50,000 in damages

based on a liquidated damages provision in the license agreement. 4

The parties filed several post-trial motions. As to the jury’s verdict against

Heumann and Shidler on ISR’s breach of confidentiality claim, Heumann and

Shidler filed a joint motion for judgment as a matter of law pursuant to Fed. R.

Civ. P. 50, or in the alternative, for a new trial pursuant to Fed. R. Civ. P. 59.

ISR requested attorney fees and costs as a prevailing party under the license

agreement, as w ell as the entry of a permanent injunction against Shidler,

Heumann, and Geerdes. Geerdes requested attorney fees and costs as a prevailing

party under the license agreement.

The district court entered a “Global Order” to resolve all of the pending

post-trial motions. Relevant to this appeal, the district court rejected Heumann

and Shidler’s contention that ISR had presented no evidence that it possessed

confidential information separate and apart from its alleged trade secret

information. The district court also rejected Heumann and Shidler’s contention

that ISR had presented no evidence to demonstrate that the two had disclosed

4
The verdict form instructed the jury to not answer whether Heumann,
Shidler, and Geerdes breached the covenant not to compete if the jury determined
the former ISR employees did not misappropriate ISR’s trade secrets.

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confidential information of any kind. As for the attorney fees and costs requested

by ISR and Geerdes, the district court reduced ISR’s fees by one-half because it

succeeded on only one of its two breach of contract claims, and by an additional

one-third because of its lack of success on its claims against Geerdes. Similarly,

the district court reduced Geerdes’s fees by two-thirds because her counsel

performed work for the benefit of Heumann and Shidler as well, and they did not

prevail at trial. 5 Lastly, the district court granted ISR’s request for a permanent

injunction against Heumann and Shidler, but not to the full extent sought by ISR.

II.

A. Denial of Judgment as a M atter of Law

W e first address Heumann’s challenges to the district court’s denial of her

Rule 50 motion for judgment as a matter of law. Heumann contends that ISR

offered no evidence that she disclosed confidential information that existed

separate and apart from ISR’s trade secret information. According to Heumann,

once the jury found that she did not misappropriate ISR’s trade secrets, the

district court should have dismissed ISR’s breach of contract claim based on the

confidentiality provision of the license agreement. Heumann argues that, in any

event, ISR failed to present evidence that she disclosed confidential information

of any kind.

5
Geerdes did not file a cross-appeal to challenge her award of attorney fees.

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 “W e review the district court’s denial [of a] motion for judgment as a

matter of law de novo, applying the same legal standard as the district court.”

Deters v. Equifax Credit Info. Servs., Inc., 202 F.3d 1262, 1268 (10th Cir. 2000)

(citing Baty v. W illamette Indus., Inc., 172 F.3d 1232, 1241 (10th Cir. 1999)). A

party is entitled to judgment as a matter of law only “if the evidence points but

one way and is susceptible to no reasonable inferences supporting the party

opposing the motion.” Id. (internal quotations omitted). In reviewing the record,

“we will not weigh evidence, judge witness credibility, or challenge the factual

conclusions of the jury.” Id. “Judgment as a matter of law . . . is appropriate

only if there is no legally sufficient evidentiary basis . . . [for a claim] under the

controlling law.” Id. (internal quotations omitted). “W e consider the evidence,

and any inferences drawn therefrom . . . in favor of . . . the non-moving party.”

Id.

W e conclude that, based on the evidence at trial, a reasonable jury could

find that Heumann failed to comply with the license agreement’s confidentiality

provision. To establish that Heumann violated the license agreement’s

confidentiality provision, the jury instructions required ISR to prove: (1) ISR’s

program contained confidential information protected under the confidentiality

provision of the license agreement; and (2) Heumann failed to comply with the

confidentiality provision of the license agreement. Instr. No. 30, App. at 122. A s

to the first element, ISR’s “Non-D isclosure and Confidentiality Agreement,”

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signed by Heumann on N ovember 1, 1998, provides evidence that Heumann

acknow ledged that she received confidential information protected by the license

agreement:

W hereas, Judy Heumann (“Licensee”) has received certain
confidential information of Harvey Barnett, Inc. (“Barnett”) . . .
relating to specialized methods, procedures and techniques for
teaching infants and children water survival, swimming and
associated aquatic skills and Licensee specifically acknowledges that
said confidential information was received, used and has been
maintained in confidence pursuant to the terms of a license
agreement between Barnett and Licensee[.]

App. at 36.

As to the second element, the confidentiality provision in the license

agreement prohibited Heumann from: (1) “divulg[ing], disclos[ing] or

comm unicat[ing] to any person or organization in any manner whatsoever any

information concerning any matters affecting or relating to the business and trade

secrets of [ISR]”; (2) “writ[ing] for publication any article concerning Infant

Sw imming Research, teaching, data, techniques, theory or trade secrets”; (3)

“train[ing] . . . or endeavor[ing] to train instructors or assistants in the same or

similar methods without [ISR’s written consent]”; (4) copying or reproducing

ISR’s documents or training videos “in whole or in part at any time”; (5)

“disclos[ing] to another person any of the methods, techniques, trade secrets or

systems used by [ISR] in business”; and (6) upon termination, retaining any

“materials [regarding ISR’s] business, techniques, advertising and trade secrets.”

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Id. at 42. Upon review of the evidence presented, we conclude that, at a

minimum, a reasonable jury could have found that Heumann violated those

portions of the confidentiality provision which prohibited her from disclosing or

comm unicating ISR’s methods and techniques that it used in its business, and

from training other instructors using similar methods without ISR’s consent.

The trial record establishes that, prior to joining ISR as an instructor in

1984, Heumann had no experience teaching infants and young children aquatic

survival skills. Heumann herself testified that she went to ISR to become not

only a better instructor, but because she found ISR’s emphasis on survival and

use of stimulus control to be unique compared to other swim programs.

Heumann became a master instructor in 1987 so that she could teach other

potential ISR instructors. By January 2000, Heumann, along with other former

ISR instructors, formed Infant Aquatic Survival to teach “swimming with a focus

on survival.” Supp. App. at 529. Heumann acknowledged that over a year after

she left ISR, the only changes she made to the ISR program w ere that she

allowed a more relaxed environment, she involved parents more, she used more

toys, and she conducted some semi-private lessons. Further, Heumann testified

that she had signed three instructors to work with infants under the age of three-

and-a-half and required those instructors to sign an agreement similar to ISR’s

license agreement before providing them w ith her “specialized techniques and

materials for training instructors.” Id. at 531. Finally, Heumann admitted that

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since she left ISR, she had not enrolled in any programs to receive additional

training to teach children to survive in the water or to train another person how

to teach children to survive in the water.

In sum, the record, viewed in the light most favorable to ISR, demonstrates

that Heumann signed a “Non-Disclosure and Confidentiality Agreement” in

which she acknowledged receiving confidential information protected by the

license agreement. Heumann had no background in teaching infants to survive in

water before joining ISR, and she received little or no training in that area since

leaving ISR. W hen Heumann formed Infant Aquatic Survival, she did not

significantly depart from the techniques and methods she learned during her

sixteen years at ISR. She also trained other instructors to teach infants to survive

in water, and required those instructors to keep confidential the information she

provided them. This evidence is more than ample to sustain the jury’s verdict

against H eumann.

M oreover, we reject Heumann’s underlying premise that the jury’s finding

that she did not misappropriate ISR’s trade secrets compelled a verdict that she

did not breach the confidentiality provision of the license agreement. ISR’s

claim for breach of the confidentiality provision is not merely a contractual

restatem ent of ISR ’s statutory misappropriation of trade secrets claim. The tw o

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claims are independent: they each contain their own unique elements which

could be established by different evidence. 6

Under the jury instructions, for ISR to establish a claim for

misappropriation of trade secrets, ISR had the burden to prove:

(1) [t]rade secrets existed; (2) [Heumann] acquired those trade
secrets from [ISR]; (3) [Heumann] used the secret information; and
(4) [ISR] suffered harm as a direct and proximate result of
[Heumann’s] use or disclosure of [ISR’s] trade secret or [that
Heumann] gained from such use or disclosure.

Instr. No. 16, App. 108. The instructions defined “trade secret” as “the whole or

any portion or phase of any scientific or technical information, design, process,

procedure, formula, improvement, confidential business or financial information,

listing of names, addresses, or telephone numbers, or other information relating

to any business or profession which is secret and of value.” Instr. No. 17, App.

at 109. The instructions further informed the jury that a “trade secret” could

“exist in a combination of characteristics and components each of which, by

6
W e note that even if ISR’s cause of action for breach of contract was based
on misappropriation of trade secrets, it would not be superceded by ISR’s
misappropriation of trade secrets claim under the Colorado Uniform Trade Secrets
Act. Colorado Revised Statutes § 7-74-108 (2005) provides:

(1) Except as provided in subsection (2) of this section, this article
displaces conflicting tort, restitutionary, and other law of this state
providing civil remedies for misappropriation of a trade secret.
(2) This article does not affect: (a) Contractual remedies, whether or
not based on misappropriation of a trade secret . . . .

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itself, is in the public domain, but the unified process, design and operation

which, in unique combination, affords a competitive advantage and is a

protectable secret.” Instr. No. 19, App. at 111. In fact, ISR’s position

throughout this litigation has been that “‘[t]he unified process, design and

operation of the ISR Program, in unique combination, affords a competitive

advantage and is a protectable [trade] secret.’” Harvey I, 338 F.3d at 1130

(citation omitted).

The jury specifically found that ISR possessed trade secrets, but concluded

that Heumann did not misappropriate those secrets. This finding did not require

the jury to also conclude that Heumann complied with the license agreement’s

confidentiality provision. The plain language of the confidentiality provision

goes beyond the protection and disclosure of trade secrets. The provision

protects several categories of information, including ISR’s trade secrets,

methods, systems, techniques, materials, business secrets, theory, data,

documents, training videos, and advertising. In our view, for instance, a

reasonable jury could conclude that Heumann did not misappropriate ISR’s trade

secrets, i.e., the ISR program as an integrated whole, and at the same time

conclude that Heumann agreed to keep confidential certain techniques and

methods of the ISR program, and that she violated her agreement when she

trained or endeavored to train other instructors using those confidential

techniques and methods.

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 B. Jury Verdict Form

Building on her prior arguments, Heumann contends that the verdict form

improperly allowed the jury to reach ISR’s breach of confidentiality claim after

the jury found that Heumann did not misappropriate ISR’s trade secrets.

Heumann makes two arguments on this point. 7 Heumann first asserts that the

license agreement’s confidentiality provision protected only trade secrets. Based

on that premise, Heumann reasons that once the jury concluded that she did not

misappropriate ISR’s trade secrets, it was required to find that she did not breach

the confidentiality provision. W e conclude that Heumann’s argument lacks

merit. As previously stated, the confidentiality provision was broader in scope

and prohibited more than the mere disclosure of trade secrets.

Next, Heumann contends that, unless she owed a fiduciary duty to ISR, she

was not obligated to keep any of ISR ’s information confidential if it failed to rise

to the level of a trade secret. 8 Applying this line of argument, Heumann asserts

that she did not owe a fiduciary duty to ISR because she was an independent

contractor, and therefore she was not required “to keep confidential any

information that was not actually a trade secret.” A plt. Br. at 29. As a result,

7
Heumann and Shilder asserted these arguments in their joint motion for a
new trial pursuant to Fed. R. Civ. P. 59.
8
Heumann teases this legal theory out of our prior decision in Kodekey
Electronics, Inc. v. M echanex Corporation, 486 F.2d 449, 454 n.4 (10th Cir.
1973). Heumann’s argument, however, may be rejected without revisiting
Kodekey.

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Heumann concludes that once the jury found that she did not misappropriate

ISR’s trade secrets, its task was completed and it should not have considered

whether she breached her confidentiality obligations under the license agreement.

H eumann’s theory, although creative, fails. For argument’s sake, we

assume that Heumann w as not obligated to protect ISR’s non-trade secret

confidential information unless a fiduciary relationship existed between ISR and

Heumann. W e conclude, however, that Heumann, at a minimum, owed a

fiduciary duty to ISR based on the terms of the agreements she signed with ISR.

Under Colorado law, although “employers do not generally owe fiduciary

duties to employees,” “an employee normally owes fiduciary duties to his

employer.” C ombs v. Price W aterhouse Coopers, 382 F.3d 1196, 1200 n.2 (10th

Cir. 2004) (citations omitted); see also Carpenter v. United States, 484 U.S. 19,

27 (1987) (noting that under the common law, “‘even in the absence of a written

contract, an employee has a fiduciary obligation to protect confidential

information obtained during the course of his employment’”) (citation omitted).

It is true that the license agreement classifies Heumann as an independent

contractor, not an employee. See App. at 41. 9 Nevertheless, Heumann signed

9
Heumann relies solely on Bithell v. W estern Care Corp., 762 P.2d 708, 714
(Colo. Ct. App. 1988) for the proposition that a plaintiff acting in the capacity of
an independent contractor does not owe a fiduciary duty to a corporation.
However, under the facts of Bithell, the case stands only for the proposition that a
corporation does not owe a fiduciary duty to an independent contractor.

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the “Non-D isclosure and Confidentiality Agreement, in which she agreed to

maintain ISR’s confidential information “in confidence” pursuant to the terms of

the license agreement that she also signed. App. at 36. W e conclude that these

agreements provide sufficient evidence that a fiduciary relationship existed

between Heumann and ISR. See Turkey Creek, LLC v. Rosania, 953 P.2d 1306,

1312 (Colo. Ct. App. 1998) (“A fiduciary duty arises between parties through a

relationship of trust, confidence, and reliance. Such duty arises w hen one party

has a high degree of control over the property or subject matter of another . . .

.”). A ccordingly, Heumann is bound by the agreements she signed.

C. Jury Instructions

Heumann contends that the district court provided two improper jury

instructions. “W e review the court’s refusal to give a particular instruction for

abuse of discretion.” Coletti v. Cudd Pressure Control, 165 F.3d 767, 771 (10th

Cir. 1999) (citation omitted). “W e do not determine w hether instructions . . . are

flaw less.” Phillips v. Duro-Last Roofing, Inc., 973 F.2d 869, 871 (10th Cir.

1992). “W e review de novo whether, as a whole, the instructions . . . stated the

governing law and provided the jury with an ample understanding of the issues

and applicable standards.” Reed v. Landstar Ligon, 314 F.3d 447, 449-50 (10th

Cir. 2002). “‘So long as the charge as a whole adequately states the law, the

refusal to give a particular requested instruction’ is not grounds for reversal.”

Coletti, 165 F.3d at 771 (citation omitted).

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 1. The Rivendell Instruction

Heumann argues the district court provided the jury with an incorrect

statement of the law concerning the application of trade secret status to publicly

known information. Specifically, Heumann contends that jury instruction

number 19, based on this court’s decision in Rivendell Forest Products v.

Georgia-Pacific Corp., 28 F.3d 1042 (10th Cir. 1994), did not articulate the

degree of specificity ISR was required to show regarding how a combination of

publicly known information was a protectable trade secret. Heumann maintains

that this error was fundamental because ISR’s claims for misappropriation of

trade secrets, breach of the covenant not to compete, and breach of the

confidentiality provision all required the existence of trade secrets.

In Rivendell, we held:

the doctrine has been established that a trade secret can include a
system w here the elements are in the public domain, but there has
been accomplished an effective, successful and valuable integration
of the public domain elements and the trade secret gave the claimant
a competitive advantage which is protected from misappropriation.

Id. at 1046. In Harvey I, we specifically relied on Rivendell to “conclude that the

district court improperly looked at components of the ISR program in isolation,

rather than as a whole, in determining that ISR does not possess a trade secret.”

338 F.3d at 1130. Following our guidance, the district court gave an instruction

based on Rivendell to supplement instruction number 17, which defined “trade

secret,” and instruction number 18, which listed relevant factors in determining

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whether a trade secret exists. Instruction number 19, the “Rivendell instruction,”

stated:

A trade secret can exist in a combination of characteristics and
components each of which, by itself, is in the public domain, but the
unified process, design and operation of which, in unique
combination, affords a competitive advantage and is a protectable
secret.

Instr. No. 19, App. at 111.

Heumann asserts that the district court’s Rivendell instruction was an

incorrect statement of the law because it failed to inform the jury of the degree of

specificity a plaintiff is required to show before a combination of publicly

available information can constitute a trade secret. W e are not persuaded. It was

not an abuse of discretion for the district court to refuse to instruct the jury

regarding the level of specificity ISR must satisfy before it could establish that a

unique combination of publicly available information constituted a trade secret.

The district court’s Rivendell instruction, standing alone, is an accurate statement

of our prior precedent. The district court gave three instructions to assist the jury

in determining whether ISR had trade secrets, and these instructions, as a whole,

provided a fair and adequate guide on this difficult to define concept. M oreover,

we note that after refusing to change the Rivendell instruction, the district court

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told Heumann that she could make her point to the jury during closing arguments.

Supp. App. at 571. 10

2. The M ulei Instruction

Heumann also contends that the district court gave an improper instruction

concerning the definition of confidential information. The challenged instruction,

instruction number 31, states:

Only confidential information acquired during the course of
employment may be protected, not the general knowledge of a
business operation. Information already known to competitors or
readily ascertainable elsewhere cannot be protected as confidential.

Instr. No. 31, App. at 123. The district court proposed this instruction, taking the

language directly from M ulei v. Jet Courier Service, Inc., 739 P.2d 889, 892

(Colo. Ct. App. 1987), rev’d on other grounds, 771 P.2d 486 (Colo. 1989) (en

banc); see also Harvey I, 338 F.3d at 1134 (quoting M ulei for the proposition that

“‘confidential information acquired during the course of employment may be

protected’”).

Heumann argues, as she did before the district court, that the following

sentence from M ulei should also have been provided to the jury in instruction

number 31:

M oreover, the general ability and know-how an employee brings into

10
A lthough the record does not include Heumann’s closing arguments, we
note that Heumann fails to assert that she was prevented from presenting her
argument to the jury.

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 employment, and the skill and experience acquired during it, are not
the employer’s property; the right to use and expand these powers
remains the employee’s.

739 P.2d at 893 (citations omitted). Heumann asserts that this additional

language was necessary for the jury to understand that she had certain rights in

the skills and experiences w hich she possessed both before her employment with

ISR, as well as those she gained during her employment with ISR.

W e are not persuaded that Heumann’s proposed third sentence from M ulei

would have significantly altered the substance of the instructions given by the

district court. Instruction number 31, as given, is an accurate statement of

Colorado law and was sufficient to guide the jury’s understanding of the nature of

confidential information. The district court did not abuse its discretion in

refusing to include the additional language from M ulei.

D. Attorney Fees

ISR challenges the district court’s ruling that Geerdes was a prevailing

party against ISR for purposes of an award of attorney fees under the license

agreement, as well as the district court’s decision to reduce attorney fees it

requested under the prevailing party provision of the license agreement.

“W e review the district court’s award of attorney fees for an abuse of

discretion, but review the underlying legal analysis de novo.” Hofer v. UNUM

Life Ins. Co. of A m., 441 F.3d 872, 884 (10th Cir. 2006) (citation omitted).

W here attorney fees are provided by contract, we have stated that the district

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court’s “role is to determine if the claimed fees are inequitable or unreasonable”

and if so, the “court has discretion to deny or reduce the fee award.” United

States v. W estern States M ech. Contractors, Inc., 834 F.2d 1533, 1549 (10th Cir.

1987).

1. Prevailing Party

ISR contends that the district court should not have awarded attorney fees

and costs to Geerdes because ISR was the prevailing party against Geerdes under

either the net judgment rule or a catalyst theory. 11 First, ISR emphasizes its

successes from the litigation: the jury found that ISR possessed trade secrets; ISR

obtained a judgment against Heumann and Shidler for $50,000 each on the breach

of confidentiality claim; ISR obtained injunctive relief against Heumann and

Shidler; and the district court granted Heumann, Shidler, and Geerdes’s joint

motion to voluntarily dismiss their counterclaims. ISR also asserts that its

lawsuit caused Geerdes to cease using ISR’s program in violation of the license

agreement. We conclude that under Colorado law , Geerdes w as a prevailing party

in this litigation.

The parties’ license agreement specifically authorizes the award of attorney

fees and costs to the prevailing party in an action to enforce the agreement: “In

the event it becomes necessary to enforce any provision of this Agreement, the

11
ISR’s status as a prevailing party against Heumann and Shidler is not
challenged on appeal.

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prevailing party shall be entitled to all court costs and a reasonable attorney fee.”

App. at 44. The license agreement, however, neither defines the term “prevailing

party,” nor sets forth the criteria which a party must satisfy to be deemed a

prevailing party. W e look to Colorado law to decide this issue. See Stichting

M ayflower Recreational Fonds v. Newpark Res., Inc., 917 F.2d 1239, 1248 (10th

Cir. 1990) (applying Utah law , including Utah law on the prevailing party

doctrine and the net judgment rule, to a Utah mining lease which contained a

provision entitling the prevailing party to recover reasonable attorney fees).

Under Colorado law , a prevailing party may recover attorney fees if

authorized by statute or contract. W heeler v. T.L. Roofing, Inc., 74 P.3d 499, 503

(Colo. Ct. App. 2003). 12 In Dennis I. Spencer Contractor, Inc. v. City of Aurora,

884 P.2d 326, 327 (Colo. 1994) (en banc), the Colorado Supreme Court

announced “the standard for determining the prevailing party for purposes of

awarding attorney fees pursuant to a fee-shifting provision in a[n] . . . agreement

which provides for reasonable attorney fees to the prevailing party in any

enforcement action.” The Colorado Supreme Court held that “w here a claim

exists for a violation of a contractual obligation, the party in whose favor the

12
Although the license agreement contains a Florida choice of law provision,
the parties have applied Colorado law throughout the litigation. See Harvey I,
338 F.3d at 1133-34 (applying Colorado law to both the covenant not to compete
and the confidentiality provision of the license agreement); H arvey Barnett, Inc.,
143 F. Supp. 2d at 1251 (noting that the parties had stipulated that Colorado law
applies to the license agreement despite the Florida choice of law provision).

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decision or verdict on liability is rendered is the prevailing party for purposes of

aw arding attorney fees.” Id. U nder the test announced in City of Aurora, we

conclude that Geerdes is a prevailing party against ISR, as the district court

entered judgment in her favor after the jury found she was not liable on either of

ISR’s breach of contract claims. 13

13
ISR contends that it is entitled to recover fees and costs as the prevailing
party against Geerdes because Geerdes voluntarily dismissed her counterclaims.
In Cantrell v. International Brotherhood of Electrical Workers, cited in ISR’s
brief, we held that a district court has discretion to aw ard a defendant costs as a
prevailing party under Fed. R. Civ. P. 54(d) when, in circumstances that do not
involve settlement, a plaintiff voluntarily dismisses her case with or without
prejudice. 69 F.3d 456, 456 (10th Cir. 1995) (en banc). Here, Geerdes decided
not to pursue her counterclaims against ISR after the district court dismissed
ISR’s claims on summary judgment. Cf. id. at 459-60 (noting that the district
court had discretion to determine on remand w hether “saving judicial resources
should be dispositive” in a denial of costs under Fed. R. Civ. P. 54(d)).
The issue of whether ISR should recover fees and costs against Geerdes as
a result of her voluntary dismissal of counterclaims is pending before the district
court. Our review of the pertinent procedural history reveals that in M arch 2003,
ISR filed appeal No. 03-1083, and Heumann, Shidler, and Geerdes filed cross
appeal No. 03-1107, challenging several rulings concerning attorney fees made by
Judge Babcock, the first district judge assigned to the case. One of those rulings
denied ISR’s request for attorney fees in connection with Heumann, Shidler, and
Geerdes’s dismissed counterclaims. In August 2003, after our decision in Harvey
I, Case No. 02-1047, we issued an order abating the appeals of the attorney fees
issues in Case Nos. 03-1083 and 03-1107 on the ground that our remand in
Harvey I would affect those appeals. In April 2004, Judge Figa, the second
district judge assigned to the case, entered his G lobal Order on the parties’ post-
trial motions. In the G lobal Order, Judge Figa refused to address ISR’s request
for attorney fees based on the dismissed counterclaims. Judge Figa reasoned that
the court was w ithout jurisdiction to consider the issue because Judge Babcock’s
ruling was part of the pending appeals in Case Nos. 03-1083 and 03-1107. In
M ay 2004, ISR filed the present appeal challenging Judge Figa’s calculation of
attorney fees under the prevailing party provision of the license agreement, Case
(continued...)

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 2. Reduction of A ttorney Fees

ISR challenges the district court’s decision to reduce its requested attorney

fees by one-half because it prevailed on only one of its two breach of contract

claims, as well as the district court’s decision to reduce its requested attorney fees

by one-third because it did not prevail against defendant Geerdes–one of the three

defendants ISR had sued.

The district court’s order states, in relevant part:

Plaintiff tried two sets of claim[s] against these defendants:
one for common law misappropriation of trade secrets and one for
breach of contract. The attorneys’ fees may be allowed only for the
claim for breach of contract as they are based on the prevailing party
provision. Since the work performed by counsel is not separated out
in his affidavit, or by his billing records, this Court cannot determine
which hours relate to which claim. However, as noted above, when a
plaintiff brings multiple claims, and the claims involve a “common
core of facts” or “related legal theories” a fee applicant may claim all
hours reasonably necessary to litigate those issues. Thus, the C ourt
will not reduce the fees based on the fact that the attorney’s work on
the trade secret claim may also have related to work on the contract
claim on which plaintiff prevailed.

However, the plaintiff brought two breach of contract claims
under the license agreement against the Defendants Heumann and
Shidler, one for breach of the covenant not to compete and one for

13
(...continued)
No. 04-1221. Finally, on July 2, 2004, this court lifted the abatement in Case
Nos. 03-1083 and 03-1107, fully remanded the cases “for whatever additional
proceedings deemed necessary with respect to attorney fee issues,” and
terminated the appeals. Accordingly, we conclude that we lack jurisdiction to
consider Judge Babcock’s denial of ISR’s request for attorney fees and costs
related to the dismissal of Geerdes’s counterclaims. That issue has been
remanded for any necessary proceedings before Judge Figa.

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 breach of the confidentiality provision, and prevailed on only the
latter of these claims. Thus, the Court will award only one-half of
the sub-total amount set forth above under the prevailing party
language of the license agreement . . . .

Finally, since plaintiff prevailed only against D efendants
Heumann and Shidler, and not against Defendant Gerdes, [sic] the
court must reduce by one-third the lodestar amount, just as was done
with Defendant Gerdes’ [sic] fee request . . . .

App. at 174-75.

On appeal, ISR maintains that its lack of success on its breach of the

covenant not to compete claim was not a proper ground for the district court to

reduce its attorney fees by one-half. In support, ISR asserts that both of its

breach of contract claims were substantially interrelated, and again emphasizes

the success it achieved in the litigation.

In addition to the standard lodestar calculation, a district court may

consider the reasonableness of the attorney fees in light of a party’s success or

lack thereof, and then adjust the fee upward or dow nw ard. Chavez v. Thomas &

Betts Corp., 396 F.3d 1088, 1103 (10th Cir. 2005) (citation omitted). W e believe

that the Supreme Court’s decision in H ensley v. Eckerhart, 461 U.S. 424 (1983),

is instructive on this matter. 14 In Hensley, the Supreme Court explained that

where a plaintiff is deemed the “prevailing party,” despite success on only some

14
W e recognize that Hensley involved an award of attorney fees under 42
U.S.C. § 1988, as opposed to a private contract. Even so, we believe that
Hensley’s principles are sound and provide useful guidance on the issue at hand.

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claims for relief, two considerations are important when awarding fees: (1)

whether the plaintiff lost on claims that were unrelated to his successful claims;

and (2) w hether “the plaintiff achieve[d] a level of success that makes the hours

reasonably expended a satisfactory basis for making a fee award[.]” Id. at 434.

The first consideration requires a court to determine w hether the “plaintiff’s

claims for relief . . . involve a common core of facts or [are] based on related

legal theories.” Id. at 435. The second consideration requires a court to

determine the “significance of the overall relief obtained by the plaintiff in

relation to the hours reasonably expended on the litigation.” Id. The Supreme

Court noted, however, that a fee reduction would be appropriate “if the relief,

however significant, [was] limited in comparison to the scope of the litigation as

a whole.” Id. at 440.

Despite the considerable discretion the district court had in making its

award of attorney fees, id. at 436-37, we question the district court’s underlying

rationale for reducing ISR’s fees by one-half. As a starting point, the district

court properly recognized that ISR was entitled to attorney fees for only its claims

under the license agreement. Agritrack, Inc. v. DeJohn Housemoving, Inc., 25

P.3d 1187, 1193 (Colo. 2001); Harwig v. Downey, 56 P.3d 1220, 1222 (Colo. Ct.

App. 2002); see also Stichting M ayflower, 917 F.2d at 1248. The district court

then stated, consistent with H ensley, that “when a plaintiff brings multiple claims,

and the claims involve a ‘common core of facts’ or ‘related legal theories’ a fee

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applicant may claim all hours reasonably necessary to litigate those claims.”

App. at 174. Applying this standard, the district court refused to reduce ISR’s

fees based on the lack of success on its misappropriation of trade secrets claim.

But the district court then departed from this standard when it announced that

because ISR prevailed on only one out of its two breach of contract claims, the

court would reduce the requested attorney fees by one-half.

Hensley rejected a mathematical approach whereby a district court

compares “the total number of issues in the case with those actually prevailed

upon.” 461 U.S. at 435 (internal quotations omitted). Here, the district court

followed this very approach, comparing the total number of claims ISR raised

under the license agreement to the number of claims ISR prevailed on under the

license agreement. Following Hensley, we conclude that the district court’s

apportionment of fees based on a success/failure ratio w as erroneous.

W here claims, such as ISR’s, are based on related legal theories and a

comm on core of facts, 15 the district court must focus on the significance of the

overall relief obtained. Ramos v. Lamm, 713 F.2d 546, 556 (10th Cir. 1983); see

15
For instance, we note that the license agreement’s covenant not to compete
prohibited Heumann, in relevant part, from “directly or indirectly . . . training
other individuals for the purpose of teaching infants or young children to swim.”
App. at 42. Similarly, the license agreement’s confidentiality provision
prohibited Heumann from training or endeavoring to train instructors using ISR’s
methods without ISR’s consent. Id.

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also Robinson v. City of Edmond, 160 F.3d 1275, 1283 (10th Cir. 1998) (stating

that “when a plaintiff achieves the principal goal of her lawsuit, lack of success

on some of her interrelated claims may not be used as a basis for reducing the

plaintiff’s fee award”). Here, the district court viewed ISR’s lawsuit as a series

of discrete claims, rather than addressing the significance of the relief ISR

obtained against Heumann and Shidler–a total of $100,000 in liquidated damages

and permanent injunctive relief— in light of the scope of the litigation as a whole.

W e are also concerned with the district court’s decision to reduce ISR’s

fees by one-third based on its unsuccessful claims against Geerdes. In W ayne v.

Village of Sebring, 36 F.3d 517 (6th Cir. 1994), the Sixth Circuit rejected the

rationale that a plaintiff’s attorney fees should be reduced where the plaintiff is

successful against some defendants, but not others, and the claims against all the

defendants are related. The plaintiffs in W ayne brought civil rights claims under

42 U.S.C. §§ 1983 and 1985 against the Village of Sebring and its council

members and manager. Id. at 522. The district court granted summary judgment

in favor of the individual council members and manager. Id. During a jury trial,

the district court entered a directed verdict against the Village of Sebring on the

issue of liability and granted partial injunctive relief to the plaintiffs. Id. On

appeal, the Sixth Circuit addressed several issues, including whether the district

court abused its discretion in reducing the plaintiffs’ requested attorney fees on

the basis that “some of the hours claimed were spent on unsuccessful claims

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against [the] dismissed [council members and manager].” Id. at 532. The Sixth

Circuit concluded that the district court’s reduction on that basis was improper:

In the present case, there is only one common core of facts
implicating both [the Village of] Sebring and the individual
defendants who prevailed on summary judgment. No separate issues
were raised against the prevailing defendants that were not raised
against Sebring itself. . . . Under Hensley, it follow s that Plaintiffs’
claim for attorney fees should not be reduced simply because some
indeterminate amount of time was expended on the prevailing
individual defendants.

Id.

Similar to the plaintiffs in W ayne, ISR litigated its case against Heumann,

Shidler, and Geerdes as a single action, and therefore its unsuccessful claims

against Geerdes were substantially related to its successful claims against

Heumann and Shidler. As ISR points out, even if it had not named Geerdes as a

party to the action, Geerdes would still have been deposed and called as a w itness

at trial. Thus, ISR attorney fees were generated on the case as a whole, rather

than on a party-by-party basis.

W e are sympathetic to the district court’s justification for reducing ISR’s

attorney fees. This case involves multiple claims and multiple parties, and neither

side separated out the work for the court. But when such a case involves related

claims and a common core of facts, “the district court should focus on the

significance of the overall relief obtained by the plaintiff in relation to the hours

reasonably expended on the litigation.” H ensley, 461 U.S. at 435. W e therefore

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reverse the district court’s award of attorney fees to ISR and remand for further

proceedings consistent with this opinion.

E. Scope of Preliminary Injunction

ISR argues that the district court’s permanent injunction did not grant it

complete relief for Heumann’s and Shilder’s breach of the confidentiality

provision. 16 W e review the scope of an injunction for abuse of discretion. The

Post Office v. Portec, Inc., 913 F.2d 802, 813 (10th Cir. 1990), vacated on other

grounds, 499 U.S. 915 (1991); see also Gibson Guitar C orp. v. Paul Reed Smith

Guitars, LP, 423 F.3d 539, 546 (6th Cir. 2005) (citation omitted); Dixon v.

Edwards, 290 F.3d 699, 718 (4th Cir. 2002) (citation omitted).

ISR requested the following injunctive relief to protect its trade secrets and

confidential information:

1. Defendants shall not train or endeavor to train instructors or assistants
in the same and/or similar methods, materials, techniques, trade secrets,
and/or systems used by ISR;
2. Defendants shall not use and/or divulge, disclose or communicate, to
any other person or entity of any kind or type, any of the methods,
materials, techniques, trade secrets, and/or systems used by ISR;
3. Defendants shall not write for publication any article concerning the
methods, materials, techniques, trade secrets, and/or systems used by ISR
in its business and shall not participate in interviews with any person or
entity of any kind or type concerning the methods, materials, techniques,
trade secrets, and/or systems used by ISR;

16
To the extent ISR asserts that the district court’s refusal to enter a
permanent injunction against Geerdes was in error, the argument must fail. W e
agree with the district court that there was no basis to grant ISR injunctive relief
against G eerdes as a result of the jury’s verdict absolving her of all liability.

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 4. Defendants shall not allow any ISR materials, documents and/or training
videos to be copied, reproduced or replicated in whole or in part;
5. Defendants shall surrender to ISR all ISR materials, documents and/or
training videos;
6. Defendants shall cease any and all utilization and/or association with the
name ISR and/or H arvey Barnett, Inc.
7. Defendants shall not divert and/or attempt to divert away any
employees, licensees, and/or instructors of ISR.

App. at 171.

The district court denied the relief requested in paragraphs 1, 2, and 3. Id.

at 168-72. Relying on Fed. R. Civ. P. 65(d), the district court ruled that it would

not issue a vague or imprecise injunction regarding “‘the methods, materials,

techniques, trade secrets, and/or systems used by ISR.’” Id. The district granted

the relief requested in paragraphs 4, 5, and 6. Specifically, the district court

ordered Heumann and Shidler to:

not allow any ISR materials, documents and/or training videos which
may still be in their custody or control to be copied, reproduced or
replicated in whole or in part;

surrender to ISR all ISR materials, documents and/or training videos
which may still be in their custody or control;

cease any and all future utilization and/or association with the name
ISR or Harvey Barnett, Inc., except that defendants may disclose that
they were trained by ISR or Harvey Barnett, Inc., but any such
disclosure, if made, should include a statement that they are no
longer associated with ISR or Harvey Barnett, Inc.

Id. Finally, the district court denied the relief requested in paragraph 7 because

the restriction emanated from the covenant not to compete and ISR had failed to

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prevail on that claim at trial. Id. 17

ISR acknowledges that the district court’s injunction adopted most of the

language from paragraphs 4, 5, and 6. Nevertheless, ISR challenges the district

court’s failure to include the language from paragraphs 1, 2, and 3. W e decline to

disturb the district court’s permanent injunction. W hile the scope of the

injunction arguably could have been broader in light of both the jury’s general

verdict that Heumann and Shidler breached the license agreement’s

confidentiality provision and the evidence ISR presented at trial, we cannot

conclude that the district court’s reasons for crafting a more limited injunction

amounted to an abuse of discretion. Cf. Starter Corp. v. Converse, Inc., 170 F.3d

286, 292 (2d Cir. 1999) (concluding that the district abused its discretion in

ordering an injunction beyond the scope of the jury verdict); United States v. A n

Article of Drug, etc., 661 F.2d 742, 746-47 (9th Cir. 1981) (rejecting the

argument that it was “impossible to tell from the general verdict which use or

uses the jury found impermissible” because “the evidence was also heard by the

judge, and the judge, not the jury, determined the scope of the injunction based

upon the judge’s view of the facts established by the evidence”). Our decision is

17
The covenant not to compete states, in relevant part, that “Licensee shall
not . . . divert away any employees, licensees or other instructors of Licensor . . .
.” ISR does not challenge the district court’s conclusion on paragraph 7. Supp.
App. at 26.

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further supported by the fact that ISR’s remedy against Heumann and Shidler for

breach of the confidentiality provision was not confined to injunctive relief: the

judgement against them for $50,000 each in liquidated damages also serves as a

strong incentive to comply with all the terms of the confidentiality provision.

III.

W e A FFIRM the jury’s verdict against Heumann, the district court’s

decision to aw ard attorney fees to G eerdes as a prevailing party under the license

agreement, and the scope of the district court’s permanent injunction against

Heumann and Shidler. W e REVERSE the district court’s award of attorney fees

to ISR and REM AND for further proceedings consistent with this opinion.

Entered for the Court

M ary Beck Briscoe
Circuit Judge

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