Arnold's Office Furniture, LLC v. Borden

1

ARNOLD'S OFFICE FURNITURE, LLC, et al., Plaintiffs, v. IAN BORDEN, et al., Defendants.

CIVIL No. 5:20-cv-05470-JMG

United States District Court, E.D. Pennsylvania

June 6, 2023

MEMORANDUM OPINION

JOHN M. GALLAGHER, UNITED STATES DISTRICT COURT JUDGE.

I. OVERVIEW

Following a seven-day jury trial on Plaintiffs Arnold's Office Furniture, LLC, (“Arnold's”) and Sunline USA LLC's (“Sunline”) claims, a jury found that Defendant Ian Borden committed breach of contract, breach of fiduciary duty, and misappropriated trade secrets in violation of the Defend Trade Secrets Act (“DTSA”) and the Pennsylvania Uniform Trade Secrets Act (“PUTSA”) by creating and operating a competing business, Defendant I M Borden Group LLC (“IMBG”). As a result, the jury awarded Plaintiffs $1,057,016 in damages. Defendants have filed a Motion for Renewed Judgment, or in the Alternative for a New Trial pursuant to Rule 50(b), and a Motion for a New Trial pursuant to Rule 59. Plaintiffs have filed a Motion for Attorney Fees and a Motion to Extend Deadline for Filing of Motion for Attorney Fees. For the reasons set forth in greater detail below, Defendants' Motions and Plaintiffs' Motion for Attorneys' Fees and Expenses are denied. Plaintiffs' Motion to Extend Deadline is granted.

II. BACKGROUND

Plaintiffs filed a Complaint with this Court on November 2, 2020, alleging misappropriation of trade secrets under the DTSA (Count I) and the PUTSA (Count II), breach of contract (Counts III-VI), and breach of fiduciary duty (Count VII). See ECF No. 1. On February 12, 2021, Plaintiffs filed an amended Complaint, see ECF No. 26, to which Defendants responded and brought counterclaims of their own, on February 26, 2021, see ECF No. 27.

The Court denied motions to dismiss filed by both parties, see ECF Nos. 13, 91, as well as the parties' cross-motions for summary judgment, see ECF No. 109. On May 3, 2022, the Court notified the parties of its intent to bifurcate the trial. See ECF No. 156. Afterward, the Court held a seven-day jury trial on Plaintiffs' claims and Defendants' counterclaims. See ECF Nos. 180, 192-197. The jury found for Plaintiffs on all claims and counterclaims and awarded $1,057,016 in damages. See ECF No. 179. The jury further determined that Defendants' misappropriation of trade secrets was willful and malicious, and that Plaintiffs were entitled to punitive damages on their claim of breach of fiduciary duty of loyalty. See id. Following the trial, the parties have filed the instant motions, which will be addressed in an omnibus memorandum.

III. DEFENDANTS' MOTION FOR RENEWED JUDGMENT AS A MATTER OF LAW OR, IN THE ALTERNATIVE, A NEW TRIAL

Defendants have moved for renewed judgment as a matter of law, or in the alternative, a new trial, on the basis that Sunline USA LLC (“Sunline”) did not possess trade secrets to misappropriate, and, that Plaintiffs' customer lists, price lists and info kits were not entitled to trade secret protection. Defendants also argue the jury's verdict on the trade secrets claims was against the weight of the evidence.

Under the Federal Rules of Civil Procedure, a party may make a motion for judgment as a matter of law before a case is submitted to the jury. Fed.R.Civ.P. 50(a)(2). “If the court does not grant a motion for judgment as a matter of law made under Rule 50(a), the court is considered to have submitted the action to the jury subject to the court's later deciding the legal questions raised by the motion.” Fed.R.Civ.P. 50(b). In ruling on the renewed motion, the Court may allow the verdict, order a new trial, or direct entry of judgment as a matter of law. Fed.R.Civ.P. 50(b)(1-3).

Such a motion should be granted only if, “viewing the evidence in the light most favorable to the nonmovant and giving it the advantage of every fair and reasonable inference, there is insufficient evidence from which a jury reasonably could find liability.” Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1166 (3d Cir. 1993) (citing Wittekamp v. Gulf & Western Inc., 991 F.2d 1137, 1141 (3d Cir.1993)). “In determining whether the evidence is sufficient to sustain liability, the court may not weigh the evidence, determine the credibility of witnesses, or substitute its version of the facts for the jury's version.” Id. (citing Fineman v. Armstrong World Indus., Inc., 980 F.2d 171, 190 (3d Cir.1992), cert. denied, 507 U.S. 921 (1993)). “Although judgment as a matter of law should be granted sparingly, [a court] will grant it where ‘the record is critically deficient of the minimum quantum of evidence' in support of the verdict.” Eshelman v. Agere Sys., Inc., 554 F.3d 426, 433 (3d Cir. 2009) (quoting Gomez v. Allegheny Health Servs., Inc., 71 F.3d 1079, 1083 (3d Cir. 1995)).

A Rule 50 motion also “may include an alternative or joint request for a new trial under Rule 59.” Fed.R.Civ.P. 50(b). A district court may grant a new trial “for any reason for which a new trial has-been granted in an action at law in federal court.” Fed.R.Civ.P. 59(a)(1)(A). This decision lies solely within the court's sound discretion. Pierce v. City of Philadelphia, 811 Fed.Appx. 142, 148 (3d Cir. 2020). The district court's discretion is more limited, however, when the type of error alleged is that the jury's verdict is against the weight of the evidence. In such a situation, a new trial should be awarded “only when the record shows that the jury's verdict resulted in a miscarriage of justice or when the verdict, on the record, cries out to be overturned or shocks [the] conscience.” Williamson v. Consol. Rail Corp., 926 F.2d 1344, 1353 (3d Cir. 1991). The Third Circuit has observed that “[t]his limit upon the district court's power to grant a new trial seeks to ensure that a district court does not substitute its ‘judgment of the facts and the credibility of witnesses for that of the jury.'” Fineman v. Armstrong World Indus., Inc., 980 F.2d 171, 211 (3d Cir.1992); Hussein v. Universal Dev. Mgmt., Inc., No. 201CV2381, 2006 WL 8091008, at *3 (W.D. Pa. Jan. 3, 2006).

“Such an endeavor is not, however, lightly undertaken, because it necessarily ‘effects a denigration of the jury system and to the extent that new trials are granted the judge takes over, if he does not usurp, the prime function of the jury as the trier of the facts.'” Guynup v. Lancaster Cty., No. 06-4315, 2009 WL 541533, at *1 (E.D. Pa. Mar. 3, 2009) (quoting Lind v. Schenley Indus., Inc., 278 F.2d 79, 90 (3d Cir. 1960)). While an error in law may be grounds for a new trial, “absent a showing of ‘substantial' injustice or ‘prejudicial' error, a new trial is not warranted” and the court should leave undisturbed a plausible jury verdict. Goodwin v. Seven-Up Bottling Co. of Philadelphia, No. 96-2301, 1998 WL 438488, at *3 (E.D. Pa. July 31, 1998) (citation omitted). “In determining whether to grant a new trial, a district court must ‘view[ ] the evidence in the light most favorable to the non-movant and giv[e] it the advantage of every fair and reasonable inference.'” Student Doe 1 v. Lower Merion Sch. Dist., No. CV 09-2095, 2010 WL 11558073, at *1 (E.D. Pa. Aug. 19, 2010) (quoting Eddy v. V.I. Water & Power Auth., 369 F.3d 227, 230 (3d Cir. 2004) (quotation marks and citation omitted).

A. Sunline USA, LLC Trade Secrets.

Defendants argue they are entitled to judgment as a matter of law, or in the alternative, a new trial because Sunline did not have any trade secrets to misappropriate. In support of this argument they point to the testimony of Jordan Berkowitz, the president of Arnold's Furniture, who testified that Sunline does not possess trade secrets, proprietary information or lists of potential customers, and that these materials fall under the umbrella of Arnold's. Partial Trial Tr. Day 2, 119: 12-20 (ECF No. 180). In this testimony Jordan Berkowitz testified that “everything is insured, owned, paid, booked through Arnold's. Sunline is just a company in name.” Id. at 119: 18-20. Defendants contend there was no other evidence in the record to support a finding of liability on a PUTSA or DTSA claim, except for the testimony of Borden, who they claim was the only witness who testified that Sunline operated as a functioning company at the time of his employment. Defendants argue it is unreasonable to assume the jury believed Borden on the issue of whether Sunline possessed trade secrets when the jury chose not to believe other parts of Borden's testimony.

Plaintiffs argue the evidence, in particular Borden's own testimony, was sufficient for the jury to conclude that Sunline possessed trade secrets. They point to his testimony regarding pricing information for Sunline PPE and info kits for Sunline products. See Trial Tr. Vol. 5, 41:21-25; id. at 190:16-24 (ECF No. 195). They also cite his testimony regarding employment with and compensation from Sunline, and the different commission structures for Arnold's and Sunline. See id. at 76:8-12; 55:6-12. They also cite the testimony of Meredith Street, the head of marketing for Plaintiffs, who testified as to the existence of the two companies. See Trial Tr. Vol. 3, 225:10-13; 238:22-23 (ECF No. 193).

With respect to Borden's testimony, when asked whether he had access to pricing information related to PPE products, he stated “Yeah, when Sunline Supply was formed you know, there were different mask prices, and bootie prices, and gown prices, sure.” Trial Tr. Vol. 5, 41:21-25. And when asked if he recognized an info kit put together by Arnold's Sunline, he stated “Correct.” Id. at 190: 22-24. He also stated on several occasions that he was employed by Arnold's and Sunline. For example, when asked if he was still employed by Arnold's in July 2021, he stated “And Sunline,” id. at 168: 11-13, and when asked about a sale to United Medical...