Acquisition Deal to Trade Secret Litigation: Propel Fuels, Inc. v. Phillips 66 Company
Executive Summary
Case: Propel Fuels, Inc. v. Phillips 66 Company, Superior Court of California, County of Alameda, Case No. 22CV007197
Matter: Trade secret misappropriation arising from disclosures made during due diligence for a potential acquisition.
Plaintiff:
Propel Fuels, Inc., a renewable fuels retailer focused on low-carbon transportation markets.
Plaintiff’s Counsel:
Kobre & Kim LLP —
Michael Ng (lead trial counsel), Daniel Zaheer (lead trial counsel), Adriana Riviere-Badell, George Stamatopoulos, Jeremy Bressman, Paul Kanellopoulos, Zachary Ritz, Christen Martosella, Eden Benadiva, Jay Mandel, Kim Kennedy, Michael Fasano, Naomi Yang, Nicholas Ickovic, Steven Kobre, and Zachary Rosenbaum.
Defendant:
Phillips 66 Company, an integrated energy manufacturing company.
Defendant’s Counsel:
Latham & Watkins LLP
Damages Breakdown
| Category | Amount |
|---|---|
| Compensatory / Unjust Enrichment (Jury) | $604,900,000 |
| Exemplary (Punitive) Damages (Court) | $195,000,000 |
| Total Judgment | Over $800 million* |
*Commonly reported as approximately $833 million with interest.
One of the Largest Trade Secret Verdicts in U.S. History
In a closely watched trade secret case, an Alameda County jury awarded Propel Fuels nearly $605 million in compensatory damages following a multi-week trial concerning the alleged misuse of confidential business information. The court later imposed nearly $200 million in exemplary damages after the jury found willful and malicious misappropriation, bringing the total award above $800 million.
This verdict—now one of the largest trade secret awards in U.S. history—provides significant guidance for companies engaged in acquisition-related information exchanges and for counsel assessing risk around NDAs and diligence protocols.
Background
Propel Fuels had entered acquisition discussions with Phillips 66, during which Propel provided detailed proprietary information related to renewable fuels market strategy, infrastructure deployment, and analytics. Propel alleged that these materials were shared under nondisclosure restrictions and contained competitively sensitive business assumptions.
When the proposed acquisition did not proceed, Propel claimed Phillips 66 subsequently used the diligence information to develop or accelerate its own renewable fuels initiatives. Phillips 66 denied the allegations, asserting that the information was not protectable, was not confidential, or was not used in its business planning.
Case Timeline
April 2019 – December 2020
Propel and Phillips 66 engage in acquisition discussions. Propel provides confidential business information and strategy documents under NDA.
January 2021
Discussions end without an agreement. Propel alleges that Phillips 66 later used diligence materials in developing renewable-fuels initiatives.
March 2022
Propel files its trade secret action in Alameda County Superior Court (Case No. 22CV007197).
September – October 2024
Multi-week jury trial conducted. Jury finds misappropriation and issues a compensatory/unjust-enrichment verdict of approximately $604.9 million. The jury also finds willful and malicious conduct, enabling a later exemplary-damages determination under CUTSA.
July 2025
Based on the jury’s willfulness finding, the court issues a written order awarding approximately $195 million in exemplary damages. The combined judgment exceeds $800 million.
November 2025
The trial court issues a detailed post-trial order denying Phillips 66’s motions for JNOV, new trial, and modification of damages. The full judgment is left in place. Phillips 66 states its intention to appeal.
2026 (Expected)
Appeal anticipated in the California Court of Appeal, First Appellate District. Statutory interest continues to accrue during appellate proceedings.
The Jury Trial
At trial, Propel presented expert testimony and documentary evidence that its diligence materials constituted protectable trade secrets and that the value of those materials derived from the company’s efforts to develop them, maintain their confidentiality, and operationalize them in emerging markets.
Phillips 66 challenged the existence of trade secrets, the sufficiency of secrecy measures, and the causal connection between Propel’s materials and Phillips 66’s independent business decisions. The trial centered on competing interpretations of internal documents, market data, and witness testimony.
After deliberation, the jury found for Propel on its claims of misappropriation.
Why the Jury Imposed Exemplary Damages
Following the jury’s verdict, the court determined that the statutory standard for exemplary damages—willful and malicious misappropriation—had been met. The record provides insight into the evidence that likely influenced the jury’s willfulness finding.
1. Evidence of Knowledge-Based Misuse of Diligence Materials
Propel presented internal planning documents from Phillips 66 that it argued mirrored detailed elements of the diligence information. Propel contended that the similarity between its proprietary models and Phillips 66’s later strategic materials demonstrated intentional use rather than independent development.
2. Internal Communications Reflecting Awareness of Confidential Value
Emails and internal discussions were introduced showing that Phillips 66 employees recognized the competitive value of the diligence materials. The jury could have interpreted these communications as evidence that the information was used with knowledge of its confidential and restricted nature.
3. Testimony Concerning Post-Diligence Conduct
Propel highlighted business decisions by Phillips 66 that closely followed the timing and content of the diligence disclosures. Witness testimony suggested that certain initiatives undertaken after discussions ended aligned with Propel’s confidential analysis. This temporal and substantive alignment may have supported a finding of willful conduct.
4. Alleged Lapses in Confidentiality Controls
Propel also presented evidence that diligence information was circulated within Phillips 66 more broadly than necessary for evaluating the transaction, contrary to the limitations set by the nondisclosure agreement. The jury may have viewed this as a disregard for confidentiality obligations.
5. Jury Finding of Willful and Malicious Misappropriation
Although juries do not issue written reasoning, the special verdict form demonstrated an affirmative finding of willfulness and malice. This triggered the court’s authority to impose exemplary damages under California’s Uniform Trade Secrets Act.
6. Judicial Review Affirmed the Evidentiary Basis
In post-trial orders, the court denied motions for a new trial and judgment notwithstanding the verdict, finding substantial evidence to support the jury’s conclusions. The court noted that the record included sufficient evidence from which a reasonable jury could determine that Phillips 66 knowingly used Propel’s trade secrets in violation of their agreement.
Key Issues Illustrated by the Case
Risks in Due-Diligence Information Sharing
The case underscores the need for well-structured confidentiality protocols during acquisition discussions and the potential exposure created when proprietary data is shared early in deal negotiations.
How Juries Evaluate Competing Expert Testimony
The verdict reflects the weight jurors may place on expert economic modeling, business planning evidence, and testimony concerning competitive impact.
The Expanding Scale of Trade Secret Damages
The combined compensatory and exemplary damages—among the highest ever awarded in a trade secret action—demonstrate the significant financial consequences that can accompany findings of willful misuse.
Judicial Deference to Jury Findings
The court’s order upholding the verdict emphasizes the importance of building a detailed evidentiary record at trial, as post-trial review generally favors jury assessments when supported by substantial evidence.