A California appellate court has issued a mixed ruling in a complex case involving allegations of unpaid wages, breach of fiduciary duty, and misappropriation of trade secrets. The complaint was filed by Ronald Andrew Both on September 21, 2017, in the Los Angeles County Superior Court against Jeffrey Scott Liolios and his company, Liolios Group Incorporated (LGI).
Both accused Liolios and LGI of numerous wrongdoings including breach of fiduciary duty, intentional misrepresentation, concealment, and failure to pay wages. Both alleged that from 2002 through the end of 2016, Liolios repeatedly lied about LGI's financial health to justify reducing Both’s compensation. According to Both, Liolios falsely claimed that the company was incurring losses that required capital contributions from its shareholders when in fact LGI was profitable and making distributions to Liolios. As a result, Both claimed he was deprived of significant earnings.
The jury awarded Both $2.7 million in actual damages for these claims along with $33,566.70 in waiting-time penalties. Additionally, the jury found that both LGI and Liolios acted with malice or fraud which warranted punitive damages amounting to $2 million.
Liolios challenged the trial court's decisions on several grounds including arguing that portions of Both’s claims were time-barred and asserting that there was insufficient evidence to support the punitive damages award due to his inability to comply with a subpoena for his tax returns. However, the appellate court affirmed the trial court's rejection of these defenses citing substantial evidence supporting Both’s claims and noting that Liolios’ failure to comply with discovery requests estopped him from contesting the sufficiency of evidence regarding his ability to pay punitive damages.
However, the appellate court found merit in one aspect of Liolios' appeal: it ruled that the $2 million punitive damages award against LGI was excessive as it constituted approximately 71% of LGI’s equity value. The court reversed this portion of the judgment and remanded for a new trial solely on determining an appropriate amount for punitive damages against LGI.
The case involved multiple parties including Geoffrey Plank who incorporated Capital Market Access (CMA), an investor relations firm competing directly with LGI after resigning from LGI in March 2016. Plank along with Grant Stude who also left LGI for CMA were cross-defendants but were not found liable by the jury.
The attorneys representing Jeffrey Scott Liolios and LGI were Michael B. Reynolds, Jeffrey M. Singletary, and Jing Hua from Snell & Wilmer LLP while Mark Mazda represented Ronald Andrew Both along with other respondents including Geoffrey Plank and Grant Stude from Capital Market Access LLC. The presiding judge over this case was Jon R. Takasugi under Case ID BC676901.