VITAFORM, INC. v. AEROFLOW, INC., 2023 NCBC 76

STATE OF NORTH CAROLINA
BUNCOMBE COUNTY
IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
19 CVS 3707
VITAFORM, INC. d/b/a BODY
AFTER BABY,
Plaintiff,
v.
AEROFLOW, INC. and MOTIF
MEDICAL, LLC,
Defendants.
ORDER AND OPINION ON
DEFENDANTS’ MOTION FOR
ATTORNEYS’ FEES
1. 	THIS MATTER is before the Court on Defendants’ Motion for Attorneys’
Fees (the “Motion”),1 filed on 19 May 2023 in the above-captioned case.
Smith DeVoss, PLLC, by Jeffrey J. Smith and John R. DeVoss, Wimer
Snider, P.C., by Jake A. Snider, and Caulk Legal, PLLC, by Taylor
Caulk, for Plaintiff Vitaform, Inc. d/b/a Body After Baby.
Ward and Smith, P.A., by Joseph A. Schouten, Hayley R. Wells, and
Jordan M. Spanner, for Defendants Aeroflow, Inc. and Motif Medical,
LLC.
Bledsoe, Chief Judge.
2. 	This action has been hotly contested since its inception four years ago. Prior
to the parties’ mutual dismissals without prejudice this past spring, the parties had
engaged in extensive discovery and active motions practice, including filing and
defending multiple motions to dismiss, motions for summary judgment, motions for
sanctions, and motions in limine. 	Although Plaintiff’s claims were initially quite
1 (Defs.’ Mot. Att’ys’ Fees, ECF No. 194.)
Vitaform, Inc. v. Aeroflow, Inc., 2023 NCBC 76.

broad in scope, Defendants succeeded in substantially narrowing the claims and
evidence remaining for trial at the time the dismissals were filed.
3. 	Plaintiff made it clear after filing its dismissal without prejudice under Rule
41 of the North Carolina Rules of Civil Procedure (the “Rule(s)”) that it intends to
refile 	the 	litigation.2 	In 	response, 	Defendants 	have 	moved to 	recover 	nearly
$1,000,000 in attorneys’ fees and costs under four separate statutes, contending that
Plaintiff proceeded with certain claims in bad faith and knew or should have known
that many of its claims lacked merit due to a lack of evidentiary support.
4. 	Having considered the Motion, the parties’ briefs, affidavits, and exhibits in
support of and in opposition to the Motion, the arguments of counsel at the hearing
on the Motion, and other appropriate matters of record, the Court, in the exercise of
its discretion, GRANTS in part and DENIES in part the Motion as set forth below.
I.
INTRODUCTION
5. 	Defendants seek attorneys’ fees and costs under N.C.G.S. §§ 6-21.5, 66-
154(d), 75-16.1, and 15 U.S.C. § 1117(a) on grounds that Plaintiff initiated and
maintained various claims when it knew or should have known they were meritless.
In awarding attorneys’ fees under these statutory provisions, a court is required to
make findings of fact and conclusions of law. 	See, e.g., Sunamerica Fin. Corp. v.
Bonham, 328 N.C. 254, 257 (1991) (N.C.G.S. § 6-21.5); Barker Indus. v. Gould, 146
N.C. App. 561, 567 (2001) (N.C.G.S. § 66-154(d)); Barbee v. Atlantic Marine Sales &
2 (See Pl.’s Resp. Defs.’ Mot. Att’ys’ Fees 1, ECF No. 200.)

Serv. Inc., 115 N.C. App. 641, 648 (1994) (N.C.G.S. § 75-16.1); CJC Holdings, Inc. v.
Wright & Lato, Inc., 979 F.2d 60, 66 (5th Cir. 1992) (15 U.S.C. § 1117(a)).
6. 	Conversely, “when the trial court in its discretion denies a motion for
attorneys’ fees, it need not make statutory findings required to support a fee award.”
E. Brooks Wilkins Family Med., P.A. v. WakeMed, 244 N.C. App. 567, 580–81 (2016)
(emphasis in original).
7. 	Nevertheless, “it is always a better practice to make such findings as the
findings may shed light on how the trial court made its decision and assist in [ ]
appellate review.” Carter v. St. Augustine’s Univ., 262 N.C. App. 507 (2018) (internal
citations omitted). 	The Court therefore sets forth the following findings of fact and
conclusions of law to support its resolution of Defendants’ request for attorneys’ fees
and costs.
II.
FINDINGS OF FACT3
8. 	Plaintiff Vitaform, Inc. d/b/a Body After Baby (“BAB”) is a California
corporation that is wholly owned by Don Francisco (“Francisco”), its president and
founder.4 	Through BAB, Francisco used his experience in the durable medical
3 Any Finding of Fact that is more appropriately deemed a Conclusion of Law, and any
Conclusion of Law that is more appropriately deemed a Finding of Fact, shall be so deemed
and incorporated by reference as a Finding of Fact or Conclusion of Law, as appropriate.
4 (See First Am. Compl. ¶ 1 [hereinafter “FAC”], ECF No. 40; Defs.’ Mem. Law Supp. Mot.
Summ. J. Ex. A Dep. Donald H. Francisco, dated May 12, 2021, at 30:10–12, 46:17–19
[hereinafter “Francisco Dep.”], ECF No. 123.2.)

equipment (“DME”) industry to market “maternity compression wear that would
include the application of an insurance payment model.”5
9. 	After 	consulting 	with 	medical 	professionals, 	Francisco 	devised 	and
developed three garments designed to provide support during pregnancy or to address
specific medical conditions associated with pregnancy (the “Garments”).6 	BAB
worked with a vendor named West Coast Medical Billing to perfect its insurance
reimbursement model, and according to Francisco, the Garments were the first such
products that qualified for insurance reimbursement.7
10. 	BAB began selling its Garments sometime between 2012 and 2013. 	It
associated with 1 Natural Way (“1NW”), a regional DME subcontractor for Defendant
Aeroflow, Inc. (“Aeroflow”), for this purpose in 2017. Aeroflow is a nationwide DME
provider and distributor.8
11. 	After Garment sales proved successful on a regional basis,9 Evan Israel
(“Israel”), 	Aeroflow’s 	director of 	emerging 	markets, 	placed a 	telephone 	call 	to
5 (Pl.’s Resp. Br. Defs.’ Mot. Summ. J. Ex. B Aff. Don Francisco, dated Sept. 30, 2019, at ¶¶ 7,
9, ECF No. 126.3.)
6 (See Pl.’s Resp. Br. Defs.’ Mot. Summ. J. Ex. C 2d Aff. Don Francisco, dated Sept. 30, 2019,
at ¶ 3 [hereinafter “2d Francisco Aff.], ECF No. 126.4; Francisco Dep. 48:15–21, 56:9–18.)
7 (See Francisco Dep. 84:3–11, 91:16–92:1, 118:13–19; 2d Francisco Aff. ¶¶ 4, 7, 9; FAC ¶ 35.)
8 (FAC ¶¶ 38–40; see Defs.’ Am. Answer to FAC and Countercls. ¶ 1 [hereinafter
“Countercls.”], ECF No. 96.) 	Pinpoint citations to “Countercls.” will be to the statements
contained in the “Counterclaims” section of Defendants’ Amended Answer to First Amended
Complaint and Counterclaims.
9 (Pl.’s Resp. Br. Defs.’ Mot. Summ. J. Ex. D 3d Aff. Don Francisco, dated Sept. 30, 2019, at ¶
3 [hereinafter “3d Francisco Aff.”], ECF No. 126.5.)

Francisco on 19 July 2018 (the “July 19 Call”) after receiving Francisco’s contact
information from 1NW.10 	During the July 19 Call, Francisco pitched BAB and its
products to Israel, explaining that he had designed the Garments to qualify for health
insurance coverage as DME.11 According to Francisco, he and Israel came to an oral
agreement during the July 19 Call whereby BAB would provide Aeroflow with its
products, marketing material, and insurance coding information and, in exchange,
Aeroflow would market the Garments through its national distribution channels,
process the associated insurance claims, and pay BAB for shipments received.12
Francisco also contends that he and Israel specifically agreed that Aeroflow would
maintain the confidentiality of BAB’s comprehensive business plan.13 Israel denies
that he made these agreements with BAB on the July 19 Call.
12. 	Soon thereafter, BAB and Aeroflow began doing business together but never
entered into a written, long-term contract for the ordering and shipment of BAB’s
products.14 	In late July 2018, BAB completed its first drop shipment order for
10 	(See 	Francisco 	Dep. 	191:10–14; 	Pl.’s 	Resp. 	Br. 	Defs.’ 	Mot. 	Summ. 	J. 	Ex. 	V 	at
AEROFLOW_0000765 [hereinafter “Disc. Docs.”], ECF No. 126.24.)
11 (See Francisco Dep. 192:9–17; Defs.’ Mem. Law Supp. Mot. Summ. J. Ex. C Dep. Evan
Israel, dated May 11, 2021, at 11:17–12:4, 23:14–21 [hereinafter “Israel Dep.”], ECF No.
123.4.)
12 (See Francisco Dep. 208:25–10:7, 245:5–47:16; 3d Francisco Aff. ¶¶ 23–27, 31; Israel Dep.
37:19–38:13, 51:6–52:3; Aff. Evan Israel, dated Oct. 18, 2019, at ¶ 32 [hereinafter “Israel
Aff.”], ECF No. 22; Pl.’s Resp. Br. Defs.’ Mot. Summ. J. Ex. E Aff. Don Francisco, dated Nov.
5, 2019, at ¶¶ 18, 56 [hereinafter “5th Francisco Aff.”], ECF No. 126.6.)
13 (Francisco Dep. 207:13–23, 217:14–18:23, 223:10–20; 3d Francisco Aff. ¶¶ 25, 28–29.)
14 (See Francisco Dep. 215:6–14; Israel Aff. ¶ 36.)

Aeroflow,15 and over the next few weeks, BAB provided Aeroflow with additional
materials to support the sale of the Garments.16 At the end of August 2018, Francisco
led on-site training to educate Aeroflow employees on BAB’s products.17 However, as
early as September 2018, the demand for BAB’s products began to outpace its ability
to fulfill orders.18
13. 	During this same time, Defendant Motif Medical, LLC (“Motif”), a wholly
owned 	subsidiary 	of 	Aeroflow, 	was 	developing 	its 	own 	line 	of 	post-partum
compression garments.19 Motif ordered BAB’s Garments through Amazon,20 located
BAB’s Chinese manufacturer after searching public records,21 and ultimately entered
into 	a 	contract 	with 	the 	same 	manufacturer 	to 	produce 	its 	own 	post-partum
compression garments.22
15 (See 5th Francisco Aff. ¶ 58.)
16 (See Israel Dep. 38:23–39:5; 3d Francisco Aff. ¶ 27; 5th Francisco Aff. ¶¶ 57, 59, 62, 69.)
17 (See Israel Dep. 33:23–34:19; 3d Francisco Aff. ¶ 16; 5th Francisco Aff. ¶ 68.)
18 (See Aff. Jennifer Jordan, dated Oct. 18, 2019, at ¶¶ 7–9 [hereinafter “Jordan Aff.”], ECF
No. 23; Jordan Aff. Ex. C, ECF No. 23.3; Disc. Docs. at AEROFLOW_0000834; see also Defs.’
Mem. Law Supp. Mot. Summ. J. Ex. B, Aff. Ryan D. Wright, dated Aug. 4, 2021, at ¶¶ 16–22
ECF No. 123.3.)
19 (See Countercls. ¶ 4; Disc. Docs. at AEROFLOW_000609, 2482, MOTIF_0000174–92, 861–
63, 1703.)
20 (See Aff. Brandon Fonville, dated Oct. 18, 2019, at ¶ 6 [hereinafter “Fonville Aff.”], ECF
No. 24; Disc. Docs. at AEROFLOW_0000588–90.)
21 (See Disc. Docs. at AEROFLOW_0000609.)
22 (See Disc. Docs. at MOTIF_0000891–93, AEROFLOW_0002440; Fonville Aff. ¶ 9.)

14. 	Aeroflow 	began 	to 	sell 	Motif’s 	post-partum 	compression 	garments 	in
January 201923 and stopped ordering BAB’s products in March 2019.24 Aeroflow sold
both BAB’s and Motif’s post-partum compression garments without identifying the
specific brand customers would receive until Aeroflow’s inventory of BAB products
was depleted in 2020. Thereafter, Aeroflow sold only Motif’s products.25
15. 	BAB filed the Complaint initiating this action against Defendants on 23
August 2019 (the “Original Complaint”), in response to which Defendants moved to
dismiss all claims.26 The Court convened a hearing on this motion on 20 November
2019,27 and shortly thereafter, on 20 December 2019, Plaintiff filed a First Amended
Complaint (the “Amended Complaint”), mooting Defendants’ still pending motion to
dismiss.28
16. 	BAB’s Amended Complaint raised seven claims: (i) fraud and fraudulent
concealment, (ii) unfair and deceptive trade practices, including violations of both the
North Carolina Unfair and Deceptive Trade Practices Act (the “UDTPA”)29 and the
23 (See Fonville Aff. ¶ 9; see also Disc. Docs. at AEROFLOW_0000809, 822, 824.)
24 (See Defs.’ Mem. Law Supp. Mot. Summ. J. Ex. D Dep. Jennifer Jordan, dated May 10,
2021, at 53:4–54:7 [hereinafter “Jordan Dep.”], ECF No. 123.5.)
25 (See Jordan Dep. 74:3–17; 5th Francisco Aff. ¶¶ 38–39; Disc. Docs. at MOTIF_0000494;
Pl.’s Resp. Br. Defs.’ Mot. Summ. J. Ex. S at VF004802, ECF No. 126.21.)
26 (Compl. [hereinafter “Original Compl.”], ECF No. 3; Defs.’ Mot. Dismiss Under Rule
12(b)(6), ECF No. 27.)
27 (Scheduling Order and Notice Video Conference, ECF No. 37.)
28 (FAC.)
29 N.C.G.S. § 75-1–49.

federal Lanham Act,30 (iii) joint venture and breach of the duty of good faith and fair
dealing, (iv) constructive fraud, (vi) misappropriation of trade secrets under the North
Carolina Trade Secrets Protection Act (“TSPA”),31 and (vii) unjust enrichment.
17. 	Defendants moved to dismiss each of these claims on 9 January 2020 and,
after 	full 	briefing 	and 	hearing, 	the 	Court 	dismissed 	Plaintiff’s 	claims 	for: 	(i)
constructive fraud; (ii) joint venture; (iii) fraud and fraudulent concealment, except
to the extent those claims were based on the July 19 Call; (iv) common law unfair
competition and violation of the UDTPA, except to the extent those claims were based
on the July 19 Call; and (v) common law unfair competition and violations of the
UDTPA and the Lanham Act, except to the extent those claims were based on BAB’s
allegations that Defendants sold BAB’s products as if they were Defendants’ own. See
Vitaform, Inc. v. Aeroflow, Inc., 2020 NCBC LEXIS 132, at *37–38, *46–47 (N.C.
Super. Ct. Nov. 4, 2020).
18. 	Defendants answered on 14 December 202032 and, after receiving leave of
the Court, filed an Amended Answer to First Amended Complaint and Counterclaims
on 16 September 2021, asserting counterclaims for defamation per se, tortious
interference with prospective economic advantage, and violation of the UDTPA
(“Defendants’ Counterclaims”).33
30 15 U.S.C. § 1125(a).
31 N.C.G.S. § 66-152–62.
32 (Defs.’ Answer FAC, ECF No. 65.)
33 (See Countercls. ¶¶ 49–66.)

19. 	BAB filed what it termed its Answer to Counterclaims, Defenses, and
Further 	Counterclaims 	on 	2 	November 	2021 	(the 	“Further 	Counterclaims”).34
Plaintiff’s purported Further Counterclaims asserted claims for tortious interference
with prospective economic advantage, violation of the UDTPA, and defamation.
Defendants moved to dismiss these new claims, and after full briefing but before the
hearing on the motion to dismiss, BAB dismissed the Further Counterclaims without
prejudice.35 Defendants dismissed their counterclaims for tortious interference and
for violation of the UDTPA without prejudice shortly thereafter.36
20. 	Defendants moved for summary judgment on BAB’s remaining claims on 7
February 2022.37 After full briefing and hearing, the Court granted partial summary
judgment 	for 	Defendants, 	dismissing 	BAB’s 	claims 	for 	(i) 	trade 	secret
misappropriation; (ii) breach of the duty of good faith and fair dealing; and (iii)
common law unfair competition and violations of the UDTPA and the Lanham Act
based on BAB’s allegations that Defendants sold BAB’s products as their own.38 The
Court 	denied 	Defendants’ 	motion 	as 	to 	BAB’s 	claims 	for 	(i) 	fraudulent
34 (Pl.’s Answer to Countercls., Defenses, & Further Countercls. [hereinafter “Further
Counterclaims”], ECF No. 106.) Pinpoint citations to Plaintiff’s “Further Counterclaims” will
be to the statements contained in the “Further Counterclaims” section of ECF No. 106.
35 (See Defs.’ Mots. Dismiss and Strike Pl.’s Further Countercls., ECF No. 108; Notice
Dismissal All Further Countercls. Without Prejudice, ECF No. 118.)
36 (See Notice Partial Dismissal Countercls. Without Prejudice, ECF No. 121.)
37 (Defs.’ Mot. Summ J., ECF No. 122.)
38 (Order and Op. Defs.’ Mot. Summ. J. ¶ 107(a)–(c), (e) [hereinafter “Summ. J. Order”], ECF
No. 138.)

misrepresentation to the extent that claim was based on an alleged promise made by
Aeroflow 	during 	the 	July 	19 	Call 	to 	maintain 	the 	confidentiality 	of 	BAB’s
comprehensive business plan; (ii) fraudulent concealment based on BAB’s allegations
in connection with and arising from the July 19 Call; (iii) common law unfair
competition and violations of the UDTPA to the extent those claims were based on
Aeroflow’s alleged promise during the July 19 Call to maintain the confidentiality of
BAB’s comprehensive business plan and Aeroflow’s alleged fraudulent concealment
in connection with and arising from the July 19 Call; and (iv) unjust enrichment (the
“Remaining Claims”).39
21. 	Following summary judgment, the Court scheduled the Remaining Claims
for trial by jury to commence in Buncombe County on 17 April 2023.40 	The Court
ordered pretrial evidentiary motions to be filed in two phases.41 	The first phase
required the parties to file motions they reasonably believed to have a significant
impact 	on 	the 	presentation 	of 	evidence 	at 	trial, 	including 	Daubert/Rule 	702
challenges to exclude expert testimony, no later than 11 January 2023. The second
phase required all other pretrial motions to be filed no later than 20 March 2023.42
39 (Summ. J. Order ¶ 107.)
40 (Notice Jury Trial, ECF No. 142.)
41 (Pretrial Scheduling Order ¶¶ 9–10, ECF No. 143.)
42 (Pretrial Scheduling Order ¶¶ 9–10.)

22. 	The parties each submitted a motion to exclude the opposing party’s expert
witness by the first phase deadline,43 and, after full briefing and hearing, the Court
issued an order on 10 March 2023 excluding both sides’ experts.44 	The Court also
excluded any other evidence of actual damages Plaintiff might seek to advance since
it had not been disclosed in discovery. The Court subsequently amended its order on
13 March 2023 to make clear that the exclusion of Plaintiff’s expert testimony was
without prejudice to Plaintiff’s right to seek, and Defendants’ right to oppose, an
award of either nominal or punitive damages at trial.
23. 	The parties submitted several other pretrial motions in the second phase.
The Court resolved these motions in an omnibus Order on Motions in Limine on 6
April 2023.45 In the same order, the Court reiterated that Plaintiff would be unable
to present any damages evidence at trial other than as it may relate to nominal or
punitive damages.
24. 	On 10 April 2023, a week before trial was to commence, Plaintiff voluntarily
dismissed 	its 	remaining 	claims 	without 	prejudice.46 	Defendants 	thereafter
voluntarily dismissed their remaining counterclaim—for defamation—on 12 April
2023.47
43 (Defs.’ Mot. Exclude Expert Report Scott Barnes and Limit Pl.’s Evid. Damages, ECF No.
149; Pl.’s Mot. Exclude Defs.’ Expert Witness, ECF No. 152.)
44 (Order and Op. Cross-Mots. Exclude Experts, ECF No. 164).
45 (Order Mots. Lim., ECF No. 187.)
46 (Notice Voluntary Dismissal Without Prejudice, ECF No. 188.)
47 (Defs.’ Voluntary Dismissal Without Prejudice, ECF No. 191.)

25. 	Defendants filed the current Motion five weeks later on 19 May 2023.48
Defendants contend that they are entitled to their attorneys’ fees and costs under the
TSPA,49 the UDTPA,50 the Lanham Act,51 and under N.C.G.S. § 6-21.5 (collectively,
the “Statutory Grounds”). 	After full briefing, the Court convened a hearing on the
Motion on 17 August 2023, at which all parties were represented by counsel (the
“Hearing”). The Motion is now ripe for resolution.
III.
CONCLUSIONS OF LAW
26. 	Our Supreme Court has long recognized that “[i]n North Carolina, a trial
court may award attorney’s fees only as authorized by statute.”52 	Winkler v. N.C.
State Bd. of Plumbing, 374 N.C. 726, 729 (2020). “Statutes that award attorney’s fees
to the prevailing party are in derogation of the common law and as a result, must be
strictly construed.” Barris v. Town of Long Beach, 208 N.C. App. 718, 722 (2010); see
also Sunamerica Fin. Corp., 328 N.C. at 257. “Whether to award or deny attorneys’
48 (Defs.’ Mot. Att’ys’ Fees 1.)
49 N.C.G.S. § 66-154(d).
50 N.C.G.S. § 75-16.1(2).
51 15 U.S.C. § 1117(a).
52 The Court notes that a North Carolina trial court also has “authority to impose a sanction
of attorneys’ fees against an attorney who violates the Rules of General Practice for the
Superior and District Courts and the Rules of Professional Conduct” and may exercise its
“inherent 	authority” 	to 	sanction 	attorneys 	for 	“unprofessional 	conduct . . . [including]
misconduct, malpractice, or deficiency in character, and dereliction of duty except mere
negligence or mismanagement.” See, e.g., Bowman v. Alan Vester Ford Lincoln Mercury, 151
N.C. App. 603, 612 (2002) (cleaned up). However, Defendants have not invoked the Court’s
inherent authority, and the Court elects not to exercise it here.

fees is within the sound discretion of the trial judge,” but “[o]nce the trial court
decides to award attorneys’ fees [ ] it must award a reasonable fee.” Custom Molders
v. American Yard Prods., 342 N.C. 133, 141–42 (1995).
27. 	The Court will consider each of Defendants’ Statutory Grounds in turn.
A. 	N.C.G.S. § 66-154(d) – North Carolina Trade Secrets Protection Act
28. 	Defendants first argue that they are entitled to their reasonable attorneys’
fees under N.C.G.S. § 66-154(d) because Plaintiff’s claim for misappropriation of trade
secrets under the TSPA was made in bad faith. See N.C.G.S. § 66-154(d) (“If a claim
of misappropriation is made in bad faith . . . , the court may award reasonable
attorneys’ fees to the prevailing party.”). Defendants also seek to recover their costs
as the prevailing party on Plaintiff’s TSPA claim under N.C.G.S. § 6-21(12).
29. 	“The term ‘bad faith’ is not expressly defined under [N.C.G.S. § 66-154(d)],
but decisions from this Court have held that an objective standard should be applied
in determining whether a claim of misappropriation is made in bad faith under the
TSPA.” Bldg. Ctr. v. Carter Lumber of the South, Inc., 2018 NCBC LEXIS 214, *4–5
(N.C. Super. Ct. Jan. 10, 2018) (citing Business Court cases). That said, our Supreme
Court long ago observed that “[b]ad faith cannot be defined with mathematical
precision.” Bundy v. Comm. Credit Co., 202 N.C. 604, 606 (1932). Indeed:
The ultimate definition of the term would depend upon the facts and
circumstances of a given controversy. Certainly, it implies a false motive
or a false purpose, and hence it is a species of fraudulent conduct.
Technically, there is, of course, a legal distinction between bad faith and
fraud, but for all practical purposes bad faith usually hunts in the fraud
pack.
Id.

30. 	Here, 	Defendants 	contend 	that 	Plaintiff 	pursued 	its 	trade 	secret
misappropriation claim in bad faith by “changing its legal theory and its supporting
facts to avoid dismissal, and continuing to prosecute the claim long after it knew it
was meritless.”53 In particular, Defendants assert that:
a. 	Plaintiff originally argued that it had seven separate alleged trade
secrets but, upon confronting Defendants’ Motion to Dismiss this claim,
amended its claims to assert that BAB’s entire business plan constituted
its trade secret;54
b. 	Plaintiff removed allegations from its Original Complaint relating to
vendor 	trials 	conducted 	with 	West 	Coast 	Medical 	Billing 	that
Defendants had argued in their Motion to Dismiss permitted reverse
engineering 	of 	Plaintiff’s 	alleged 	trade 	secrets, 	allegations 	that
Defendants contend were fatal to Plaintiff’s trade secret claim;55
c. 	Plaintiff changed its original allegation that Francisco made a “product
presentation” to Aeroflow’s “entire division,”56 which Defendants argued
on their Motion to Dismiss showed that Plaintiff did not engage in
reasonable efforts to maintain the secrecy of its alleged trade secret, to
53 (Defs.’ Mem. Law Supp. Mot. Att’ys’ Fees 11–12 [hereinafter Defs.’ Br., ECF No. 195.)
54 (Defs.’ Br. 13.)
55 (Defs.’ Br. 13) (noting deletion from the FAC of Original Compl. ¶ 13—the allegation that
BAB’s vendor “undertook trials to prove that the coding and billing concept rendered BAB
products payable under health insurance”).
56 (Original Compl. ¶ 34.)

state instead that Francisco trained only “department heads” and
instructed them to keep the information “in-house”57—a purported
statement 	of 	fact 	Francisco 	contradicted 	through 	later 	affidavit
testimony58 averring 	that 	he 	“gave 	thorough 	presentations 	to 	the
employees and customer service representatives;59
d. 	Plaintiff submitted an alleged “sham affidavit” from Francisco stating
that Defendants had stolen BAB’s Garment designs, thereby directly
contradicting his deposition testimony that Defendants had copied
BAB’s design measurements, in an unsuccessful effort to create a
genuine issue of material fact to avoid summary judgment;60 and
e. 	BAB 	had 	made 	its 	purported 	trade 	secret 	business 	plan 	publicly
available before filing its lawsuit by disclosing it to potential distribution
partners on a non-confidential basis.61
31. 	Plaintiff responds by contending that it proceeded in good faith, that it did
not act with false motive or purpose, and that the Court’s dismissal of its trade secret
claim through dispositive motions practice does not justify a fee award against it.62
57 (FAC. ¶ 74.)
58 (3d Francisco Aff. ¶ 16.)
59 (See generally Defs.’ Br. 13.)
60 (Defs.’ Br. 14; compare Pl.’s Resp. Br. Defs.’ Mot. Summ. J. Ex. G 7th Aff. Don Francisco,
dated Mar. 9, 2022, at ¶¶ 36, 63, ECF No. 126.8, with Francisco Dep. 165:8–65:13). The Court
noted this contradiction in its summary judgment order. (See Summ. J. Order ¶¶ 33–35.)
61 (Defs.’ Br. 14–15.)
62 (Pl.’s Resp. Defs.’ Mot. Att’ys’ Fees 6–9.)

Upon a careful review of Defendants’ concerns, the Court agrees with Plaintiff, but
for different reasons.
32. 	First, the Court cannot conclude that BAB’s modification of its purported
trade secret from seven individual trade secrets into a single trade secret business
plan evinces Plaintiff’s false motive or purpose. Rather, it appears at least as likely,
if not probable, that Plaintiff simply reconsidered the best way to identify its trade
secret for pleading purposes—not that Plaintiff invented a new trade secret where
one did not exist. 	Indeed, while the Court dismissed Plaintiff’s misappropriation
claim at summary judgment, the Court nonetheless found that Plaintiff had met its
burden to identify its alleged trade secret with the particularity our courts require.
See Vitaform, Inc. v. Aeroflow, Inc., 2022 NCBC LEXIS 128, *14 (N.C. Super. Ct. Oct.
27, 2022).
33. 	Similarly, the Court cannot conclude that Plaintiff’s omission of previous
allegations—in particular, its allegation concerning its vendor’s trials—implies false
purpose or false motive because Plaintiff offers evidence that these trials were
conducted using confidential information provided by Francisco. As such, it is at least
arguable that the trials could not be replicated by others without Francisco’s consent,
which Defendants have not shown that he gave.63
34. 	Next, the Court concludes that Plaintiff’s allegations about Francisco’s
presentation, and, in particular, the new allegation that Francisco instructed his
63 It is also worth noting that Plaintiff did not delete the entirety of this allegation in the
Amended Complaint, which still describes how BAB perfected its insurance reimbursement
model with the vendor. (See FAC ¶ 35.)

department head audience to keep his presentation “in-house,” can be reasonably
read as an expansion, rather than a repudiation, of Plaintiff’s allegations about this
meeting in the original Complaint. 	While the Court is concerned that Francisco
appears to have changed his description of his audience more than once, the Court is
not prepared to conclude that his changing description reflects false motive or
purpose rather than imprecision or inconsistent memory.
35. 	The Court views the “sham affidavit” in a somewhat similar light. 	While
troubling and properly excluded at summary judgment,64 the affidavit sought to offer
modified testimony that would not have rescued Plaintiff’s claim and is as likely to
reflect Francisco’s imprecise recollections four years after the events at issue as it is
to show his intentional misrepresentations.
36. 	Finally, 	while 	the 	Court 	dismissed 	Plaintiff’s 	misappropriation 	claim
because “the undisputed evidence show[ed] that BAB’s entire business model was
publicly in use and known to Defendants prior to the July 19 Call” and “BAB’s efforts
were not reasonable under the circumstances to maintain the secrecy of its alleged
trade secret,” the Court is not prepared to conclude, based on a review of the entire
evidentiary record, that Plaintiff filed and prosecuted its misappropriation claim in
bad faith. While it appears to the Court that Plaintiff struggled to identify its trade
secret throughout the litigation, it ultimately succeeded. 	And while the Court
rejected Plaintiff’s contentions that its business plan was maintained in secrecy and
not available for public inspection, Plaintiff nonetheless made arguments sufficiently
64 (Summ. J. Order ¶ 35.)

grounded in fact and law in support of that proposition to preclude a finding that it
proceeded in bad faith, under either an objective or subjective standard. For each of
these reasons, the Court will deny Defendants’ Motion for attorneys’ fees under
N.C.G.S. § 66-154(d) and, in the exercise of its discretion, deny Defendants’ request
for costs under N.C.G.S. § 6-21(12).
B. 	The Lanham Act
37. 	The Lanham Act provides that “[t]he court in exceptional cases may award
reasonable attorney fees to the prevailing party.”65 	Relying on the United States
Supreme Court’s decision in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572
U.S. 	545 	(2014), 	which 	analyzed 	the 	Federal 	Patent 	Act’s 	identical 	provision
awarding attorneys’ fees in “exceptional cases,” the Fourth Circuit has held that a
trial court:
may find a case “exceptional” and therefore award attorneys’ fees to the
prevailing party under § 1117(a) when it determines, in light of the
totality of the circumstances, that (1) there is an unusual discrepancy in
the merits of the positions taken by the parties, based on the non-
prevailing 	party’s 	position 	as 	either 	frivolous 	or 	objectively
unreasonable, (2) the non-prevailing party has litigated the case in an
unreasonable manner, or (3) there is otherwise the need in particular
circumstances 	to 	advance 	considerations 	of 	compensation 	and
deterrence.
Georgia-Pacific Consumer Prods., LP v. Von Drehle Corp., 781 F.3d 710, 721 (4th Cir.
2015) (cleaned up). 	Since the standard is framed in the disjunctive, only one of the
identified factors must be met. Dewberry Eng’rs Inc. v. Dewberry Grp., Inc., 77 F.4th
265, 294 (4th Cir. 2023) (noting that the standard “does not require a prevailing party
65 15 U.S.C. § 1117(a).

to demonstrate the presence of all three circumstances” (emphasis in original)). 	In
addition, whether a case is “exceptional” must be proven by a preponderance of the
evidence, Verisign, Inc. v. XYZ.COM, LLC, 891 F.3d 481, 484 (4th Cit. 2018), and a
showing of misconduct or bad faith is not required. 	Citi Trends, Inc. v. Coach, Inc.,
780 Fed. App’x. 74, 80 (4th Cir. 2019).
38. 	Defendants argue that Plaintiff’s litigation conduct makes this case an
exceptional one under the Lanham Act, and the Court agrees. 	Here, BAB based its
Lanham Act claim on the critical factual allegation that Motif copied BAB’s Garments
and passed them off as Motif’s. 	The discovery record, however, failed to show any
evidence to support this contention. The Court explained this total failure of proof in
its summary judgment ruling:
91. 	Nonetheless, even if the Court were to consider this testimony,
and, 	in 	particular, 	Francisco’s 	testimony 	that 	“[b]y 	March 	6,
2019, . . . my products were being marketed under the name ‘Motif
Medical[,]’ ” which is BAB’s critical factual assertion for its Reverse
Passing Off claim, the Court notes that in the same affidavit, Francisco
directly contradicted this testimony, admitting, as Defendants contend,
that “Aeroflow sold a nameless brand.”
92. 	The documentary evidence on which BAB relies likewise shows
that Defendants sold BAB and Motif products in a “brand agnostic”
manner. For example, BAB relies on screenshots of a 2 April 2019 press
release from PRWeb announcing Aeroflow’s addition of a “selection of
Maternity Support Bands,” as well as screenshots of an overview of the
benefits of maternity compression garments on Aeroflow’s website dated
23 	December 	2018 	and 	several 	undated 	screenshots 	of 	Aeroflow’s
product pages for the various compression garments it sold.
93. 	Despite Francisco’s assertion that, at some point, BAB’s products
“were being marketed under the name ‘Motif Medical[ ]’ ” and that the
“models shown wore products with the Motif brand name on them[,]” none
of the product images include brand labels, and the only mention of a
specific brand name appears on the product page for the “Postpartum

Compression Garment” underneath the “Description” label, where it
states that “Motif Postpartum Recovery Support Garments were designed
by medical professionals” without suggesting which brand a customer
would receive upon purchase. In fact, the only evidence in the record that
reflects Aeroflow’s representations to its customers about which brand of
compression garment a customer would receive upon purchase supports
Defendants’ position: “The brand you will receive is either [BAB] or
[Motif].” Moreover, BAB has proffered no evidence that a customer ever
received a BAB product in a Motif package and, as counsel for BAB
acknowledged 	at 	the 	Hearing, 	when 	BAB 	itself 	purchased 	a 	Motif
product, BAB received a Motif garment in a Motif package.
* * *
97. 	BAB has failed to offer evidence from which a jury could conclude
that Aeroflow’s marketing caused consumer confusion. 	As discussed
above, the undisputed evidence shows that Aeroflow did not market a
particular brand of maternity compression garments. When asked which
brand Aeroflow sold, the evidence shows that Aeroflow responded that
customers would receive either a BAB product or a Motif product.
Moreover, the branding on the products and their packaging is distinct,
there are no allegations of mislabeling, and BAB has not offered evidence
suggesting that customers ever received BAB products in Motif packaging
or Motif products in BAB packaging.
Vitaform, Inc., 2022 NCBC LEXIS 128, at *48–50.
39. 	While Plaintiff may have had reasonable suspicions of a Lanham Act
violation when it filed this claim in its Amended Complaint, Plaintiff did not have
any supporting evidence, and Plaintiff surely knew by the close of discovery that it
had not discovered any evidence to support its Lanham Act claim. 	As a result,
Plaintiff should have dismissed its Lanham Act claim at that time and not required
Defendants to seek summary judgment on what had clearly been shown to Plaintiff
to be a meritless claim. 	The Court therefore concludes that Plaintiff’s continued
litigation of this claim after the close of discovery was objectively unreasonable, that
Plaintiff litigated this claim in an unreasonable manner by persisting in advancing

the 	claim 	when 	it 	knew 	it 	had 	no 	evidence 	in 	support, 	and 	that, 	in 	these
circumstances, considerations of compensation and deterrence warrant an award of
attorneys’ fees to Defendants.
40. 	Based on the above, the Court therefore concludes that, for each of these
reasons, this is an “exceptional case” under 15 U.S.C. § 1117(a), entitling Defendants
to an award of attorneys’ fees. See, e.g., Design Rsch., Inc. v. Leather Indus. of Am.,
No. 1:10-CV-157, 2016 U.S. Dist. LEXIS 134319, at *5–17 (M.D.N.C. Sept. 29, 2016)
(finding 	an 	exceptional 	case 	and 	awarding 	attorneys’ 	fees 	because 	plaintiff’s
continued prosecution of its Lanham Act claim through summary judgment was
objectively unreasonable since “the evidence gleaned in discovery failed to reveal any
evidence” of a Lanham Act violation and noting in support of its award “the
importance of deterring litigants from pursuing their claims even when the claim has
fallen apart following discovery due to a lack of supporting evidence”); LendingTree,
LLC v. Zillow, Inc., 54 F. Supp. 3d 444, 463 (W.D.N.C. 2014) (finding an exceptional
case under the Patent Act and granting attorneys’ fees where plaintiff “should have
realized 	the 	strength 	of 	[defendant’s] 	defenses 	at 	summary 	judgment.”);
Phonometrics, Inc. v. ITT Sheraton Corp., 64 Fed. App’x. 219, 221 (Fed. Cir. 2003)
(affirming district court’s conclusion that a case was exceptional because plaintiff
“continued to litigate the case even after it knew that it could not prevail on the
merits.”).
41. 	In considering the scope of an appropriate award of attorneys’ fees under
15 U.S.C. § 1117(a), the Court recognizes that it is difficult to divide the hours

expended in seeking summary judgment on Plaintiff’s Lanham Act claim from the
hours expended in seeking summary judgment on Plaintiff’s other claims.66 Federal
courts have held in such circumstances that apportionment between time spent on
an unsuccessful Lanham Act claim and other unsuccessful claims is unnecessary if
“the court finds the claims are so inextricably intertwined that even an estimated
adjustment would be meaningless.” 	Gracie v. Gracie, 217 F.3d 1060, 1070 (9th Cir.
2000); Eschert v. City of Charlotte, 2017 U.S. Dist. LEXIS 141902, at *11–12
(W.D.N.C. Sept. 1, 2017). 	“To determine whether claims are related, the Court
considers whether and to what degree there was a common nucleus of operative fact
with other claims that do not have a fee-shifting provision.” 	DENC, LLC v. Phila.
Indem. Ins. Co., 454 F. Supp. 3d 552, 563–64 (M.D.N.C. 2020); see, e.g., Eschert, 2017
U.S. Dist. LEXIS 141902, at *11–12 (finding apportionment of fee award unnecessary
where all claims were based on a single, intertwined nucleus of operative fact and the
work of plaintiff’s attorneys related to the litigation as whole).
42. 	Applying these considerations here, the Court concludes after thorough
and careful review that Defendants’ efforts in successfully obtaining summary
judgment on Plaintiff’s Lanham Act claim focused on the litigation as a whole and
that all claims in the litigation were inextricably interwoven and arose from a
66 While Defendants’ counsel acknowledged at the Hearing that the time spent litigating the
Lanham Act claim could be apportioned from the time spent litigating Plaintiff’s other claims,
counsel made no such representation specific to summary judgment briefing and argument,
which, by its nature, involves synthesizing a party’s arguments on all claims into a
persuasive whole.

common nucleus of operative fact.67 As a result, the Court will, in the exercise of its
discretion, require Plaintiff to pay all of Defendants’ attorneys’ fees incurred in
connection with prosecuting Defendants’ Motion for Summary Judgment.
C. 	N.C.G.S. 75-16.1 – UDTPA
43. 	Under N.C.G.S. § 75-16.1, the Court may award a defendant its attorneys’
fees as part of the court costs incurred in defending a claim for unfair and deceptive
trade practices under N.C.G.S. § 75-1.1 only upon the Court’s finding that “[t]he party
instituting the action knew, or should have known, the action was frivolous and
malicious.” 	N.C.G.S. § 75-16.1(2). 	A claim is “frivolous” under the UDTPA “if a
proponent can present no rational argument based upon the evidence or law in
support of [it]. 	A claim is malicious if it is wrongful and done intentionally without
just cause or excuse or as a result of ill will.” McKinnon v. CV Indus., Inc., 228 N.C.
App. 190, 199 (2013) (alteration in original) (quoting Blyth v. McCrary, 184 N.C. App.
654, 663, n. 5 (2007)). “Maliciousness can develop during the course of litigation if a
67 The United States Supreme Court long ago recognized the propriety of a fully compensatory
fee award in the face of interwoven claims, noting in the context of a claim under 42 U.S.C.
§ 1988, that:
Many civil rights cases will present only a single claim. 	In other cases the
plaintiff's claims for relief will involve a common core of facts or will be based
on related legal theories. Much of counsel’s time will be devoted generally to
the litigation as a whole, making it difficult to divide the hours expended on a
claim-by-claim basis. Such a lawsuit cannot be viewed as a series of discrete
claims. Instead 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. . . . The result is what matters.
Hensley v. Eckerhart, 461 U.S. 424, 435 (1983). 	The Court notes that these same
considerations apply equally to the prosecution of Defendants’ Motion for Summary
Judgment here.

party persists after discovering that his claim is meritless.” Laschkewitsch v. Legal
& Gen. Am., Inc., No. 5:15-CV-251, 2017 U.S. Dist. LEXIS 180972, at *5 (E.D.N.C.
Nov. 1, 2017), aff’d, 725 Fed. App’x. 252 (4th Cir. 2018).
44. 	Plaintiff’s UDPTA claim largely overlapped its TSPA and Lanham Act
claims. 	Defendants have therefore, in substantial part, based their request for fees
under the UDTPA on the same grounds they advanced in support of their requests
for fees under those two statutes. Defendants also argue that they are entitled to fees
because part of Plaintiff’s UDTPA claim was “based on allegations of fraud that BAB
could not adequately plead after two attempts.”68
45. 	As an initial matter, the Court rejects Defendants’ argument for fees based
on Plaintiff’s unsuccessful fraud claim; indeed, Plaintiff succeeded in advancing
through dispositive motion practice a narrowed claim for fraud based on the July 19
Call, and the Court is not persuaded that the unsuccessful aspects of Plaintiff’s fraud
claim were asserted frivolously or maliciously.
46. 	The Court also rejects Defendants’ claim for fees under the UDTPA based
on the TSPA claim for the same reasons it will deny Defendants relief under
N.C.G.S. §§ 66-154(d) and 6-21(12).
47. 	In contrast, however, the Court will grant Defendants’ Motion under the
UDTPA to the extent it is based on the Lanham Act claim. As explained above, the
evidence shows that Plaintiff knew that its Lanham Act claim was wholly without
merit when BAB could not discover any supporting evidence by the close of the
68 (Defs.’ Br. 18.)

discovery period. At that point, Plaintiff could not, and did not at summary judgment,
advance a rational argument based upon the evidence or law in support of its Lanham
Act-based UDPTA claim. As a result, the Court concludes that Plaintiff’s opposition
to Defendants’ Motion for Summary Judgment on this claim was frivolous under
N.C.G.S. § 75-16.1(2).
48. 	Under North Carolina law, “where all of plaintiff’s claims arise from the
same nucleus of operative fact[ ] and each claim was ‘inextricably interwoven’ with
the other claims, apportionment of fees is unnecessary.” 	Whiteside Estates, Inc. v.
Highlands Cove, LLC, 146 N.C. App. 449, 467 (2001). In determining whether claims
are 	“inextricably 	interwoven,” 	courts 	apply 	“the 	reasonable 	relation 	test:
reasonableness, not arbitrary classification of attorney activity, is the key factor
under all our attorneys’ fees statutes in awarding fees for attorney activity[.]” 	Id.
(cleaned up).
49. 	Applying that test here, and after thorough and careful review, the Court
concludes, in the exercise of its discretion, that Defendants’ efforts in successfully
obtaining summary judgment on Plaintiff’s Lanham Act and Lanham Act-based
UDTPA claims were based on a common nucleus of operative fact and thus were
inextricably interwoven. 	See, e.g., Irwin Indus. Tool Co. v. Worthington Cylinders
Wis., LLC, 747 F. Supp. 2d 568, 591 (M.D.N.C. 2010) (determining Lanham Act and
UDTPA claims were “necessarily intertwined”).
50. 	As 	a 	result, 	the 	Court 	will, 	in 	the 	exercise 	of 	its 	discretion, 	award
Defendants their attorneys’ fees under N.C.G.S. § 75-16.1(2) to the same extent the

Court will award fees under 15 U.S.C. § 1117(a). 	See, e.g., Insight Health Corp. v.
Marquis Diagnostic Imaging of N.C., LLC, 2018 NCBC LEXIS 69, at *12 (N.C. Super.
Ct. July 6, 2018) (finding that plaintiff was entitled to attorneys’ fees on all claims
where “the time spent on all of these claims overlapped with [plaintiff’s] recoverable
claim and request for relief and arose from a common nucleus of law or fact shared
with [plaintiff’s] recoverable claim and request for relief”); Okwara v. Dillard Dep’t
Stores, Inc., 136 N.C. App. 587, 595 (2000) (recognizing that determining whether
claims are inextricably interwoven is in the trial court’s discretion). 	Defendants,
however, shall have only a single recovery of their attorneys’ fees under these two
statutes.
D. 	N.C.G.S. § 6-21.5
51. 	Under N.C.G.S. § 6-21.5:
[i]n any civil action, . . . the court, upon motion of the prevailing party,
may award a reasonable attorney’s fee to the prevailing party if the
court finds that there was a complete absence of a justiciable issue of
either law or fact raised by the losing party in any pleading. The filing
of a general denial or the granting of any preliminary motion, such as a
motion for judgment on the pleadings [under Rule 12], a motion to
dismiss pursuant to [Rule 12(b)(6)], a motion for a directed verdict
pursuant to [Rule 50], or a motion for summary judgment pursuant to
[Rule 56], is not in itself a sufficient reason for the court to award
attorney[s’] fees, but may be evidence to support the court’s decision to
make such an award.”69
52. 	“The relevant inquiry under . . . N.C.G.S. § 6-21.5 is whether a justiciable
issue is present. 	If there is, the moving party’s motion must fail. 	If not, the court
must then examine whether the non-moving party knew or should have known the
69 N.C.G.S. § 6-21.5.

claim was not justiciable.” Willard v. Barger, 2021 NCBC LEXIS 7, at *9 (N.C. Super.
Ct. Jan. 22, 2021). 	A “complete absence of a justiciable issue” exists where the
plaintiff either (1) was reasonably aware when the complaint was filed that the
pleading did not contain a justiciable issue or (2) persisted in litigating the case after
it reasonably should have become aware that the pleading no longer contained a
justiciable issue. 	Credigy Receivables, Inc. v. Whittington, 202 N.C. App. 646, 655
(2010). 	For an award of attorneys’ fees under N.C.G.S. § 6-21.5 to obtain, “it must
conclusively appear that [justiciable] issues are absent even giving the pleadings the
indulgent treatment they receive on motions for summary judgment or to dismiss.”
Sunamerica Fin. Corp., 328 N.C. at 257 (citation omitted).
53. 	Defendants first move under N.C.G.S. § 6–21.5 to recover the attorneys’ fees
they incurred in defending against BAB’s TSPA, Lanham Act, and UDTPA claims.
As an initial matter, the Court’s rulings above establish that Plaintiff’s TSPA claim
was justiciable. As a result, the Court will deny Defendants’ Motion to the extent it
seeks relief under N.C.G.S. § 6-21.5 based on Plaintiff’s TSPA claim.
54. 	At the same time, the Court’s conclusion that Plaintiff persisted in litigating
its Lanham Act and Lanham Act-based UDTPA claims after it knew it had no
evidence to support them establishes that those claims were nonjusticiable or became
nonjusticiable during the course of litigation. 	Accordingly, the Court will grant
Defendants relief under N.C.G.S. § 6-21.5 to the same extent and in the same amount
as the Court will award relief under 15 U.S.C. § 1117(a) and N.C.G.S. § 75-16.1.

55. 	Defendants also request recovery of their attorneys’ fees under N.C.G.S.
§ 6-21.5 for successfully defeating (i) BAB’s purported Further Counterclaims and (ii)
BAB’s effort to present damages evidence disallowed by the Court and damages
theories that were not disclosed during discovery.70
56. 	The Court will deny Defendants’ Motion as to Plaintiff’s effort to present
improper damages evidence and theories because N.C.G.S. § 6-21.5 only prohibits
taking nonjusticiable positions in pleadings, not in motions practice.
57. 	The Court, however, will grant Defendants’ Motion as to Plaintiff’s filing of
its Further Counterclaims. Those claims—for defamation, tortious interference with
prospective economic advantage, and violation of the UDTPA—were filed after
Defendants filed the same claims against Plaintiff some weeks before. 	After
Defendants moved to dismiss these claims and shortly before the hearing on
Defendants’ motion, Plaintiff voluntarily dismissed its claims.
58. 	Even a cursory review reveals that none of these claims was well-grounded
in law or fact. Plaintiff’s Further Counterclaims alleged that Defendants submitted
an affidavit by third-party witness Scott Owen (“Owen”) that was “riddled with
falsehoods,”71 and further that Owen’s falsehoods could only have resulted through
70 Defendants also originally sought their fees under N.C.G.S. § 6-21.5 for defeating BAB’s
opposition to Defendants’ motion to amend to add counterclaims, (see ECF Nos. 82–83, 89,
91, 95), and BAB’s motion in limine seeking to exclude the de bene esse deposition of Scott
Owen. Defendants subsequently withdrew these grounds for relief, the former in Defendants’
Reply in Support of Motion for Attorneys’ Fees, and the latter at the Hearing. 	(See Defs.’
Reply Supp. Mot. Att’ys’ Fees 11 n.3, ECF No. 201.)
71 (Further Countercls. ¶ 30.)

Defendants’ defamatory statements to Owen about Francisco.72 Plaintiff also alleged
that Defendants provided Francisco’s deposition transcript to Owen and thereby
“formed the basis for the defamation of Plaintiff’s business reputation.”73
59. 	Not only were Plaintiff’s “Further Counterclaims” procedurally improper—
Plaintiff asserted additional claims against Defendants as if by right without properly
seeking leave of court under Rule 15 to amend its Amended Complaint to assert new
claims—but they were also barred by the absolute privilege afforded to “statements
made in an affidavit which are pertinent to matters involved in a judicial proceeding,”
Jarman v. Offutt, 239 N.C. 468, 472 (1954), as well as to communications between
counsel and witnesses or potential witnesses in a judicial proceeding, see Jones v.
Coward, 193 N.C. App. 231, 235 (2008) (holding that “an attorney’s statement or
question to a potential witness regarding a suit in which that attorney is involved,
whether preliminary to trial, or at trial, is privileged”). 	Since each of the Further
Counterclaims was based on the same allegedly defamatory statements, all of these
purported “counterclaims” were barred by the judicial proceeding privilege. 	See
Jones, 193 N.C. App. at 235 (dismissing claims for intentional infliction of emotional
distress and negligence that were based upon the allegedly defamatory statements
because to dismiss only the defamation claim would “eviscerate” the privilege).
60. 	Moreover, Plaintiff’s “Further Counterclaims” were fatally deficient on the
merits. 	Indeed, the premise of Plaintiff’s claims—that Defendants communicated
72 (Further Countercls. ¶¶ 32, 35, 38.)
73 (Further Countercls. ¶¶ 3, 5, 49, 59, 68).

false information to Owen about Francisco’s dealings with Owen himself74—makes
little 	sense, 	especially 	given 	the 	lack 	of 	context 	or 	supporting 	information
surrounding the allegations. Owen, not Defendants, was a party to his conversations
with 	Francisco, 	so 	it 	cannot 	bear 	scrutiny 	that 	Owen 	somehow 	relied 	upon
Defendants’ false information concerning his own conversations with Francisco. And,
of course, Plaintiff alleges that Defendants prompted false responses from Owen by
providing Francisco’s deposition transcript to Owen—i.e., testimony from Francisco
himself, not Defendants—which Defendants were entitled to do. 	The Further
Counterclaims relied entirely on speculation and unsupported assumptions, yet
Defendants were forced to incur time and expense in moving to dismiss these
purported counterclaims only for Plaintiff to voluntarily dismiss them shortly before
the hearing on the motion was to be held. 	The Court thus finds that these Further
Counterclaims were nonjusticiable, and that attorneys’ fees are therefore warranted
under N.C.G.S. § 6-21.5.
61. 	Accordingly, based on the above, the Court, in the exercise of its discretion,
will grant Defendants’ Motion under N.C.G.S. § 6-21.5 to the extent it is based on
Plaintiff’s filing of the Further Counterclaims and order Plaintiff to pay Defendants
their attorneys’ fees incurred in defending against and moving to dismiss those
claims.
74 (Further Countercls. ¶¶ 36–37, 39.)

E. 	N.C.G.S. § 6-20.
62. 	The Court may award costs in its discretion under N.C.G.S. § 6-20. Under
North Carolina law, those costs are limited to those enumerated in N.C.G.S.
§ 7A-305(d).75 Based on the findings above, the Court concludes, in the exercise of its
discretion, that it is appropriate and in the interests of justice to award Defendants
their costs incurred in connection with prosecuting Defendants’ Motion for Summary
Judgment and in defending against and moving to dismiss Plaintiff’s Further
Counterclaims.
IV.
CONCLUSION
63. 	WHEREFORE, 	this 	Court, 	in 	the 	exercise 	of 	its 	discretion, 	hereby
ORDERS as follows:
a. 	Defendants’ Motion is hereby GRANTED in part, and Defendants
shall be awarded their attorneys’ fees incurred in connection with (i)
prosecuting their Motion for Summary Judgment, under 15 U.S.C.
§ 1117(a), N.C.G.S. § 75-16.1 to the extent Plaintiff’s UDTPA claim was
based on the Lanham Act, and N.C.G.S. § 6-21.5 and (ii) defending
against Plaintiff’s Further Counterclaims, under N.C.G.S. § 6-21.5.
Defendants shall also be awarded their incurred costs to this same
75 “The expenses set forth in this subsection are complete and exclusive and constitute a limit
on the trial court’s discretion to tax costs pursuant to N.C.G.S. § 6-20.” N.C.G.S. § 7A-305(d).

extent under N.C.G.S. § 6-20, subject to the limitations imposed by
N.C.G.S. § 7A-305(d).
b. 	Defendants’ Motion is otherwise DENIED.
c. 	Defendants shall have through and including 27 November 2023 to
submit supplemental briefing and supporting documentation detailing
their fees and costs incurred in (i) prosecuting their Motion for Summary
Judgment and (ii) defending against Plaintiff’s Further Counterclaims.
d. 	Plaintiff shall have through and including 11 December 2023 to file its
response.
e. 	Defendants shall have through and including 21 December 2023 to file
any reply.
f. 	All briefing shall comply with BCR 7.
g. 	The Court will determine whether to hold a hearing on Defendants’
supplemental briefing on their request for attorneys’ fees and costs at a
later date.
SO ORDERED, this the 9th day of November, 2023.
/s/ Louis A. Bledsoe, III
Louis A. Bledsoe, III
Chief Business Court Judge