Educ. Logistics, Inc. v. Laidlaw Transit, Inc.

935 F.Supp.2d 1038

EDUCATION LOGISTICS, INC., a Montana corporation, and Logistics Management, Inc., a Washington corporation, Plaintiffs,

v.LAIDLAW TRANSIT, INC., a Delaware corporation, Defendant.

No. CV 07–06–M–DWM.

United States District Court,

D. Montana,

Missoula Division.

April 1, 2013.

Charles P. Nomellini, Samuel T. Bull, Foster Pepper PLLC, Seattle, WA, Ronald A. Bender, Matthew J. Cuffe, Worden Thane, Missoula, MT, for Plaintiffs.

Debra D. Parker, Attorney at Law, Missoula, MT, Devon D. Sharp, James D. Jordan, Munsch Hardt Kopf & Harr, Dallas, TX, for Defendant.

DONALD W. MOLLOY, District Judge.

Following the jury's award of $28.4 million, Laidlaw moves for judgment as a matter of law, a new trial, and to amend the judgment. When jury instructions were settled, I submitted the full panoply of damage instructions with the caveat that I would consider the consequential damages argument anew, if it appeared such damages were part of the verdict. A hearing was held on the pending motions on March 13, 2013. Having considered the arguments, Laidlaw's motion is granted in part. The jury award is reduced because the jury awarded consequential damages, damages which are expressly precluded by the Agreement. The motion is denied with respect to the other issues.

Background

The jury awarded Edulog $28,408,712. This award was based on two claims made by Edulog: (1) Laidlaw didn't use its best efforts to promote Edulog's software and (2) Laidlaw gave school districts unauthorized look-up access to Edulog's software. The verdict awarded damages as follows:

+----------------------------------------------------------------------------+
¦    ¦Best efforts claim                     ¦                               ¦
+----+---------------------------------------+-------------------------------¦
¦    ¦Lost license fees:                     ¦$8,596,956                     ¦
+----+---------------------------------------+-------------------------------¦
¦    ¦Lost annual licenses and maintenance   ¦$8,596,956                     ¦
¦    ¦fees:                                  ¦                               ¦
+----+---------------------------------------+-------------------------------¦
¦    ¦Lost perpetual license fees:           ¦$ 70,000                       ¦
+----+---------------------------------------+-------------------------------¦
¦    ¦Lost royalties:                        ¦$9,460,000                     ¦
+----+---------------------------------------+-------------------------------¦
¦    ¦Unauthorized look-up access            ¦                               ¦
+----+---------------------------------------+-------------------------------¦
¦    ¦Lost license fees:                     ¦$ 842,800                      ¦
+----+---------------------------------------+-------------------------------¦
¦    ¦Lost annual license and maintenance    ¦$ 842,800                      ¦
¦    ¦fees:                                  ¦                               ¦
+----------------------------------------------------------------------------+

(Jury Verdict, doc. 328.)

Prior to the close of the case, Laidlaw moved for judgment as a matter of law as to whether the annual license and maintenance fees constituted consequential damages that should be excluded. (Transcript, doc. 353 at 167.) The parties were advised that the Court was reserving its ruling on Laidlaw's motion for judgment as a matter of law, as it pertained to consequential damages, until after the jury returned its verdict. (Transcript, doc. 348 at 166–171, doc. 354 at 166.)

In addition to this issue, Laidlaw also moved for judgment as a matter of law with respect to Neil Beaton's expert testimony, arguing that his testimony should be excluded for a variety of reasons. (Transcript, doc. 353 at 167–69.) Beaton was allowed to testify after a F.R. Evid. 104 hearing was conducted outside the presence of the jury; while I expressed reservations concerning some of his assumptions. ( Id. at 175.) I determined it was a matter of the weight to be given his opinion as opposed to its admissibility.

Summary Conclusion

The jury's verdict is reduced by $9,509,756. The annual license and maintenance fees—$9,439,756—are consequential damages, which are expressly precluded by the Agreement. Moreover, the $70,000 awarded for lost perpetual license fees is duplicative of the award for lost license fees. This amount is also subtracted from the award. Laidlaw's motions are denied in all other respects.

Standard

There are three standards that apply to Laidlaw's motion: the standards for (1) motion for judgment as a matter of law, (2) motion for a new trial, and (3) motion to alter or amend the judgment.

I. Rule 50(b): Motion for Judgment as a Matter of Law

Laidlaw raises several issues in its Rule 50(b) motion. Different standards apply to different issues because Laidlaw raised some of its arguments in its Rule 50(a) motion but not others.

A. Review of issues first raised in a Rule 50(a) motion

Rule 50 allows a party to move for judgment as a matter of law before the case is submitted to the jury and to then renew that motion after the verdict is returned. Fed.R.Civ.P. 50(a), (b). Laidlaw has done so here, with respect to some of the issues. If a party moves for judgment as a matter of law on a particular issue before the case is submitted to the jury and the court does not rule on the motion, then “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).

The same standard applies to both a motion for judgment as a matter of law made under Rule 50(a) and a renewed motion made under Rule 50(b). EEOC. v. Go Daddy Software, Inc., 581 F.3d 951, 961–63 (9th Cir.2009); Charles Alan Wright and Arthur R. Miller, Federal Practice and Procedure vol. 9B, § 2537 (3d ed.) (“The standard for granting a renewed motion for judgment as a matter of law under Rule 50(b) is precisely the same as the standard for granting the pre-submission motion under Rule 50(a).”)

When considering a Rule 50(b) motion, the court reviews the jury's verdict for substantial evidence. Id. (citations omitted). “ ‘[T]he court ... may not make credibility determinations or weigh evidence.’ ” Id. (quoting Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000)). “Rather, [it] must view the evidence in the light most favorable to the non moving party ... and draw all reasonable inferences in that party's favor.” Id. (citations and internal quotation marks omitted). “The test applied is whether the evidence permits only one reasonable conclusion, and that conclusion is contrary to the jury's verdict.” Id. (citations and internal quotation marks omitted).

When a Rule 50(b) motion presents a question of law or a mixed question of law and fact, the court presumes that the jury resolved the underlying factual disputes in favor of the verdict, and the court leaves those findings undisturbed if they are supported by substantial evidence. See Kinetic Concepts, Inc. v. Smith & Nephew, Inc., 688 F.3d 1342, 1356–57 (Fed.Cir.2012) (citations omitted). It is then necessary to examine the legal arguments to see whether they are correct in light of the presumed jury findings. Id. (citations omitted).

B. Review of issues not raise in a Rule 50(a) motion

“[A] party cannot properly raise arguments in its post-trial motion for judgment as a matter of law under Rule 50(b) that it did not raise in its preverdict Rule 50(a) motion.” Go Daddy Software, 581 F.3d at 961 (citations and internal quotation marks omitted). If a party fails to raise an argument in a pre-verdict motion for judgment as a matter of law, the general rule is that a court will review the argument for plain error. Id. at 961 (citations and internal quotation marks omitted). Plain error exists only if the jury's verdict “would result in a manifest miscarriage of justice.” Id. This review is “extraordinarily deferential” and “limited to whether there was any evidence to support the jury's verdict.” Id. at 961–62.

Some of the arguments that Laidlaw raises here present a unique situation—some either were or were not raised in Laidlaw's summary judgment briefing but were not raised in its Rule 50(a) motion. Edulog argues that those arguments are therefore waived.

Ninth Circuit case law suggests that those questions might not be waived, at least for purposes of appeal. If a party raises a pure question of law before the case goes to the jury (e.g., in summary judgment briefing) then, the party does not need to raise those arguments in a Rule 50(a) or Rule 50(b) motion to preserve the arguments for appeal. See Cochran v. City of L.A., 222 F.3d 1195, 1200 (9th Cir.2000); Landes Constr. Co., Inc. v. Royal Bank of Can., 833 F.2d 1365 (9th Cir.1987) (“As long as a party properly raises an issue of law before the case goes to the jury, it need not include the issue in a motion for a directed verdict in order to preserve the question on appeal.”) The reason for this rule is that a pure question of law does not implicate the sufficiency of the evidence presented to the jury, which is in the purview of Rule 50. This rule might suggest that a district court could consider a legal question raised in a Rule 50(b) motion and motion for summary judgment but not raised in a Rule 50(a) motion.

Moreover, the Seventh Circuit has held that a district court may revisit after trial issues raised at the summary judgment stage “if he has a conviction at once strong and reasonable that the earlier ruling was wrong, and if rescinding it would not cause undue harm to the party that benefitted from it.” Avitia v. Metro. Club of Chicago Inc., 49 F.3d 1219, 1227 (7th Cir.1995) (citing Ariz. v. Cal., 460 U.S. 605, 618 n. 8, 103 S.Ct. 1382, 75 L.Ed.2d 318 (1983)).

Here, Laidlaw is now asking to revisit questions that Laidlaw raised in its summary...