Willful-and-Malicious Trade-Secret Misappropriation Supports Fee Awards Even With Zero Damages; Fee Appeal Cannot Revive Untimely Merits Appeal

I. Introduction

Equity Resources, Inc. v. T2 Financial, LLC, d/b/a Revolution Mortgage is a Sixth Circuit decision reviewing a post-trial attorney-fee award entered after a jury found that a competitor willfully and maliciously misappropriated trade secrets. Equity Resources, Inc. (“Equity”) sued T2 Financial, LLC (“Revolution”) alleging that Revolution recruited former Equity employees to obtain and use Equity’s trade secrets to divert mortgage business. Equity ultimately tried three claims against Revolution: (1) tortious interference with a business relationship, (2) conversion, and (3) misappropriation of trade secrets under both the Ohio Uniform Trade Secrets Act (Ohio Rev. Code § 1333.61 and fee provision § 1333.64(C)) and the Defend Trade Secrets Act (18 U.S.C. § 1839 and fee provision § 1836(b)(3)(D)).

The key issues on appeal were: (a) whether Equity qualified as a “prevailing party” entitled to fees under DTSA/OUTSA even though the jury awarded zero damages on the trade-secret claims; (b) whether the district court reasonably calculated and reduced the requested fees under the lodestar framework; and (c) whether Revolution could use an appeal from the fee order to obtain appellate review of the underlying merits verdict long after the merits judgment.

II. Summary of the Opinion

The Sixth Circuit affirmed the district court’s order awarding Equity reduced attorney’s fees and full costs, while denying interest. The panel held:

Equity was a prevailing party because the jury found for Equity on all claims and found willful and malicious misappropriation, satisfying DTSA/OUTSA’s fee-eligibility threshold.
A jury’s zero-damages award on trade-secret misappropriation does not bar fee-shifting under DTSA/OUTSA where the predicate finding (willful and malicious misappropriation) is made; damages are not a statutory prerequisite to fees.
Revolution could not bootstrap an untimely merits appeal into a timely fee appeal; appellate jurisdiction over the merits expired 30 days after entry of the merits judgment.
The district court did not abuse its discretion in the reasonableness analysis (lodestar reductions and downward adjustment), and Revolution did not specifically challenge the lodestar calculation on appeal.

III. Analysis

A. Precedents Cited

1. The “American Rule” and statutory authorization for fees

McQueary v. Conway, 614 F.3d 591 (6th Cir. 2010): Cited for the baseline principle that there is no common-law right to fees for the prevailing party. The court used this to frame fees here as purely statutory under DTSA/OUTSA.
Buckhannon Bd. & Care Home v. W. VA. Dep't of Health and Hum. Res., 532 U.S. 598 (2001): Reinforces the “American Rule” and that fee awards require explicit statutory authorization—provided here by DTSA and OUTSA.

2. Appellate jurisdiction and the separateness of fee disputes from merits judgments

White v. New Hampshire Department of Employment Security, 455 U.S. 448 (1982): Key authority that a fee request is collateral and “uniquely separable” from the merits, meaning it does not function like a motion to alter/amend the merits judgment. The Sixth Circuit relied on this to reject Revolution’s attempt to leverage a fee appeal into a merits appeal.
Morgan v. Union Metal Manufacturing, 757 F.2d 792 (6th Cir. 1985): Central Sixth Circuit precedent holding that a judgment is final for appeal even if the amount of attorney’s fees has not been determined, and that failing to timely appeal the merits defeats appellate jurisdiction over merits issues later raised in a fee-related appeal.
Memphis Sheraton Corp. v. Kirkley, 614 F.2d 131 (6th Cir. 1980): Quoted in Morgan for the proposition that pending fee issues do not prevent the merits judgment from being final for appeal purposes.
Richland Knox Mut. Ins. Co. v. Kallen, 376 F.2d 360 (6th Cir. 1967): Cited for the rule that the time limit to appeal is “mandatory and jurisdictional,” supporting dismissal of any untimely merits attack.

3. “Prevailing party” and success

Freed v. Thomas, 137 F.4th 552 (6th Cir. 2025): Provides the review standard—prevailing-party status reviewed de novo—and lodestar presumption for reasonableness; also cited for the requirement of a “concise but clear explanation.”
Lackey v. Stinnie, 604 U.S. 192 (2025): Supplies the Supreme Court’s prevailing-party formulation: a party prevails when a court conclusively resolves a claim granting enduring merits relief that alters the parties’ legal relationship.
Planned Parenthood Sw. Ohio Region v. Dewine, 931 F.3d 530 (6th Cir. 2019): Cited for the “significant issue” / “some of the benefit” formulation (quoting Hensley)—used to confirm Equity’s prevailing-party status because Equity won on all claims.
Hensley, 461 U.S. at 433–36: Used both for the prevailing-party/success framing and for the lodestar and degree-of-success principles guiding fee reasonableness.

4. Standards of review for fee reasonableness and fee-calculation methodology

In re Flint Water Cases, 63 F.4th 486 (6th Cir. 2023): Cited for abuse-of-discretion review and deference to district courts’ superior feel for the litigation.
Hometown Folks, LLC v. S & B Wilson, Inc., 643 F.3d 520 (6th Cir. 2011): Quoted via Flint Water Cases for deference and the desire to avoid frequent appellate review of fact-bound fee questions.
Ne. Ohio Coal. for the Homeless v. Husted, 831 F.3d 686 (6th Cir. 2016): Cited for what constitutes abuse of discretion and for the need for a “concise but clear explanation” of the fee award.
Degussa Admixtures, Inc. v. Burnett, 277 F. App'x 530 (6th Cir. 2008): Cited for clear-error review of underlying factual findings supporting fee determinations.

5. The “zero damages” argument and why cited analogies did not control

Kennard v. Means Indus., No 11-cv-15079, 2017 U.S. Dist. LEXIS 120457 (E.D. Mich. Aug. 1, 2017), and Foltice v. Guardsman Products, Inc., 98 F.3d 933 (6th Cir. 1996): Revolution invoked ERISA fee cases, but the court treated them as inapposite to DTSA/OUTSA’s statutory trigger. The panel also emphasized Foltice’s warning against creating non-statutory presumptions for or against fee awards—undercutting Revolution’s attempt to create a “no damages, no fees” rule.
Becker Equip. Inc. v. Flynn, No. CA2002-12-313, 2004 WL 486219 (Ohio Ct. App. Mar. 15, 2004): Revolution relied on this to suggest low/nominal damages warrant denying fees. The Sixth Circuit distinguished it: the trial court denied fees because it found insufficient evidence of willful and malicious misappropriation (i.e., the statutory predicate was not met), and the appellate court affirmed as a discretionary call—not as a rule that damages control eligibility.
Farrar v. Hobby, 506 U.S. 103 (1992): Cited for the proposition that the “technical nature” of the judgment affects the reasonableness (amount) of fees, not the prevailing-party inquiry. The Sixth Circuit used Farrar to reinforce that zero/nominal damages may inform degree-of-success adjustments, but do not categorically bar fees.

B. Legal Reasoning

1. Jurisdiction: fee appeal cannot resurrect a merits appeal

Revolution’s notice of appeal targeted the fee order (ECF No. 155) but also attempted to challenge the jury’s “legally erroneous” conversion finding embedded in the merits judgment. The panel rejected this attempt as jurisdictionally barred:

Under White v. New Hampshire Department of Employment Security, attorney’s fees are collateral to the merits and do not reset or extend the time to appeal the merits judgment.
Under Morgan v. Union Metal Manufacturing, the merits judgment is final for appeal even if fee amounts remain unresolved.
Applying Fed. R. App. P. 4(a)(1)(A) and Fed. R. App. P. 4(a)(7)(A), the time to appeal the merits ran from the clerk’s entry of judgment on March 22, 2024, expiring 30 days later. Revolution’s April 4, 2025 filing was untimely as to merits.
The panel treated the deadline as “mandatory and jurisdictional,” citing Richland Knox Mut. Ins. Co. v. Kallen.

Doctrinally, the decision underscores a clean appellate-procedure line: parties must separately and timely preserve merits appeals; a later fee order does not reopen the merits.

2. Prevailing party: winning verdicts plus willful/malicious finding

The panel affirmed that Equity prevailed because the jury found for Equity on all three claims and awarded damages on conversion, thereby altering the parties’ legal relationship. Relying on Lackey v. Stinnie and Planned Parenthood Sw. Ohio Region v. Dewine, the court treated success on significant issues as sufficient, not requiring damages on every claim.

Critically, DTSA and OUTSA condition fee awards (for the pathway at issue) on a finding that misappropriation was “willful and malicious.” The jury expressly made that finding by clear and convincing evidence, satisfying the statutes’ trigger: 18 U.S.C. § 1836(b)(3)(D) and Ohio Rev. Code § 1333.64(C).

3. Reasonableness: lodestar, deference, and degree-of-success adjustments

The Sixth Circuit reiterated the standard sequence:

Start with the lodestar (reasonable hours × reasonable rates) per Hensley.
Treat the lodestar as presumptively reasonable (citing Freed v. Thomas).
Permit adjustments—especially for “the degree of success obtained” (the “most critical” factor, quoting Hensley and echoed in Farrar v. Hobby).
Review the district court’s bottom-line fee judgment for abuse of discretion with substantial deference (citing In re Flint Water Cases).

Applying those principles, the panel emphasized that neither DTSA nor OUTSA requires a damages award as a condition to fees; the statutes require a willful-and-malicious finding, which existed here. The district court reduced requested fees (rates, hours, and an overall downward adjustment) and provided an explanation. Revolution did not meaningfully challenge the lodestar itself or request further reductions on appeal, leaving little for the panel to second-guess.

C. Impact

Trade secret fee-shifting under DTSA/OUTSA: The decision reinforces that fee eligibility under the willful-and-malicious pathway turns on the statutory predicate finding, not on whether the jury awards damages on the trade-secret claim. Plaintiffs (and defendants, where the statute allows) can treat the willfulness/malice finding as the central gatekeeper for fees; damages, if absent, may still inform the amount through degree-of-success analysis.
Litigation strategy and verdict forms: Because the panel accepted fee eligibility notwithstanding zero trade-secret damages, parties may place heightened emphasis on special interrogatories/verdict-form findings addressing “willful and malicious” misappropriation, which can independently unlock fee exposure even where damages are uncertain or difficult to quantify.
Appellate practice: The opinion is a cautionary procedural precedent: an appeal from a fee order cannot serve as a backdoor merits appeal. Counsel must calendar the merits-judgment appeal deadline independently of fee proceedings.
Trial-court discretion preserved: By rejecting a categorical “no damages, no fees” rule, the court preserves district courts’ discretion to award (or reduce) fees based on the overall success and circumstances, consistent with lodestar principles rather than bright-line presumptions.

IV. Complex Concepts Simplified

American Rule: In U.S. litigation, each side usually pays its own lawyers unless a statute or contract says otherwise.
Prevailing party: A party who wins in a way that meaningfully changes the parties’ legal relationship (e.g., winning liability findings and/or damages, injunctions, declaratory relief).
Fee-shifting under DTSA/OUTSA (willful and malicious): If the factfinder determines misappropriation was willful and malicious, the statute authorizes the court to award reasonable attorney’s fees to the prevailing party—separate from whether damages were awarded.
Lodestar method: The standard way to calculate fees: reasonable hours × reasonable hourly rate; the court can then adjust up or down, especially based on how successful the party was overall.
Standards of review (de novo vs. abuse of discretion): “De novo” means the appellate court decides the issue fresh (used for prevailing-party status). “Abuse of discretion” is highly deferential (used for the amount/reasonableness of fees).
Collateral vs. merits issues: Attorney’s fees are typically treated as separate from the merits judgment; appealing one does not automatically reopen the other.

V. Conclusion

The Sixth Circuit’s decision cements two practical rules in DTSA/OUTSA fee litigation and appellate procedure. First, where a jury finds willful and malicious trade-secret misappropriation, DTSA/OUTSA permit a reasonable fee award even if the jury awards zero damages on the trade-secret claims—damages may affect the size of the fee, not categorical eligibility. Second, parties cannot convert a fee appeal into a late merits appeal; merits-judgment deadlines run independently and are jurisdictional. Together, these holdings strengthen the consequences of willfulness/malice findings in trade-secret cases while reinforcing strict compliance with appellate timing rules.