Paramount Fin. Commc'ns, Inc. v. Broadridge Inv'r Commc'ns Sols., Inc.

684 F.Supp.3d 316

PARAMOUNT FINANCIAL COMMUNICATIONS, INC., et al., Plaintiffs v. BROADRIDGE INVESTOR COMMUNICATIONS SOLUTIONS, INC., Defendant.

CIVIL ACTION NO. 15-405

United States District Court, E.D. Pennsylvania

Signed July 26, 2023

Henry Ian Pass, Law Offices of Henry Ian Pass, Gladwyne, PA, Amy E. Pearl, Kerri E. Chewning, Archer & Greiner, P.C., Voorhees, NJ, Jeffrey M. Scott, Archer & Greiner, P.C., Philadelphia, PA, Richard G. Tuttle, Law Offices of Henry Ian Pass, Bala Cynwyd, PA, for Plaintiffs.

Chanda A. Miller, Barnes & Thornburg LLP, Philadelphia, PA, Antoinette Snodgrass, Meaghan V. Geatens, Faegre Drinker Biddle & Reath LLP, Philadelphia, PA, Michael O. Adelman, Faegre Drinker Biddle & Reath, Florham Park, NJ, for Defendant.

MEMORANDUM

EDUARDO C. ROBRENO, District Judge

CONTENTS

I. Introduction . . . 323

II. Factual Background . . . 324

III. Motions as to Liability . . . 326

A. Broadridge's Motion for Judgment as a Matter of Law . . . 326

1. Legal Standard . . . 326

2. Analysis . . . 327

B. Motion for a New Trial . . . 335

1. Legal Standard . . . 335

2. Broadridge's Motion for New Trial . . . 335

3. Plaintiff Jonathan Miller's Motion for New Trial . . . 337

IV. Motions as to Damages . . . 339

A. Motion to Strike Expert Report . . . 339

1. Legal Standard . . . 340

2. Analysis . . . 341

B. Broadridge's Motion for Judgment as a Matter of Law as to Damages or in the Alternative for a New Trial . . . 344

C. Broadridge's Motion to Amend the Judgment . . . 345

D. Plan Management's Motion to Award Interest . . . 346

V. Stay of Execution . . . 346

VI. Conclusion . . . 347

I. INTRODUCTION

Paramount Financial Communications (d/b/a Plan Management) and Jonathan Miller (collectively, "Plaintiffs") brought this action against Broadridge Investor Communications Solutions, Inc. ("Broadridge") for fraudulent inducement and breach of contract. A nine-day jury trial was held. Following the close of Plaintiffs' case, Broadridge moved for judgment as a matter of law. The Court granted the motion as to Jonathan Miller's claim for fraudulent inducement, but denied the motion as to Plan Management's breach of contract claim. After the close of all the evidence, Broadridge again moved for judgment as a matter of law. The Court took the motion under advisement and charged the jury. The jury returned a verdict in favor of Plan Management, finding that Broadridge acted with willful misconduct and gross negligence in its breach of the contract.¹ Following a short damages phase of trial, the jury awarded Plan Management $25,000,000 in compensatory damages for breach of contract.

Before the Court are several post-trial motions by all parties to the case. Plaintiff Jonathan Miller has moved for a new trial as to his fraudulent inducement claim. Plaintiff Plan Management has moved to alter the judgment to award post-judgment interest. Broadridge has moved for judgment as a matter of law as to both liability and damages and seeks a stay of execution of the judgment. In addition, Broadridge has moved to strike the expert report of Michael Molder.²

II. FACTUAL BACKGROUND

Plaintiffs and Broadridge entered into seven agreements on March 8, 2010. Two of those agreements are relevant to this case: the Stock Purchase Agreement of one of Mr. Miller's companies, StockTrans, Inc., and the Marketing Agreement. The Stock Purchase Agreement provided, in part, that Mr. Miller would sell StockTrans to Broadridge, and Broadridge would perform the Marketing Agreement by referring clients to one of Mr. Miller's businesses, Plan Management.

The Marketing Agreement commenced on March 8, 2010 and ran for an initial Term of five (5) years. Under the Agreement,

By the date that is twelve (12) months from the Effective Date, Broadridge will use commercially reasonable efforts to refer at least 200 Viable Clients to Plan Management, (as adjusted, the "Referral Target"). During each twelve (12) month period thereafter during the Term, Broadridge will use commercially reasonable efforts to refer such number of Viable Clients as equals or exceeds the Referral Target applicable to the previous twelve month period multiplied by one hundred and ten (110%) percent. As used here in, a "Viable Client" is a corporate issuer that has any type of securities or securities-related incentive plan or that expresses an interest in implementing such a plan and expresses to Plan Management or Broadridge an interest in learning about Plan Management's services and which observes a demonstration of Plan Management's Option Trax® system.

Plan Management would then pay Broadridge a $1,000.00 referral fee for each client referred by Broadridge and closed by Plan Management. The Marketing Agreement could be terminated during the initial term if a material breach went uncured for sixty days after the nonbreaching party provided notice, or upon mutual consent of the parties.

The Marketing Agreement also included a limitation of liability clause. This provision stated, in relevant part:

Notwithstanding anything else in this Agreement to the contrary, in the absence of a party's gross negligence or willful misconduct, the aggregate liability of any party in connection with any breach of this Agreement shall be limited to the amount of fees paid or payable to Broadridge by Plan Management during the twelve month period preceding the date of such breach. EXCEPT WITH RESPECT TO . . . EITHER PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, IN NO EVENT WILL EITHER PARTY BE RESPONSIBLE FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES WHICH THE OTHER PARTY MAY INCUR OR EXPERIENCE ON ACCOUNT OF ENTERING

INTO OR RELYING ON THIS AGREEMENT (INCLUDING LOST PROFITS OR LOST SAVINGS), EVEN IF FORESEEABLE OR EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES . . . .

The Marketing Agreement was fully integrated.

Plan Management received only a few referrals from Broadridge in the initial year of the Marketing Agreement. In that first year--and in subsequent years--Mr. Miller and other Plan Management representatives reached out to Broadridge representatives, asking for more referrals. Plan Management also created a referral form in 2011 to help facilitate referrals by Broadridge salespeople.

Plan Management ultimately sent a notice of breach to Broadridge in the summer of 2014, after having received only a small fraction of the expected referrals, approximately four years into the contract. Plan Management and Mr. Miller then brought this suit in 2015, alleging breach of contract (Count I), fraudulent inducement (Count II), constructive/equitable fraud (Count III), and negligent misrepresentation (Count IV). Broadridge filed a partial motion to dismiss, and the Court granted the motion in part, dismissing the claims in Count II as they pertained to the Marketing Agreement, and dismissing Counts III and IV entirely. See Paramount Fin. Commc'ns, Inc. v. Broadridge Inv. Commc'n Sols., Inc., No. 15-405, No. 2015 WL 4093932 (E.D. Pa. July 7, 2015) (DuBois, J.).

Following a lengthy and contentious discovery period, Broadridge filed a motion to exclude Plan Management's expert reports and a motion for summary judgment. Plan Management had proffered two damages experts to estimate lost profits, Joseph Potenza and Michael Molder. The Court granted in part and denied in part Broadridge's motion to exclude the expert reports, finding that Mr. Potenza's report must be excluded because it was not reliable, and in turn excluding those portions of Mr. Molder's report that relied on Mr. Potenza's report. Mr. Molder's calculation that relied on internal data provided by Plan Management was found sufficiently reliable, and could be admissible at trial so long as the factual assumptions of the calculation had a reasonable basis in the trial record. See Paramount Fin. Commc'ns, Inc. v. Broadridge Inv. Commc'n Sols., Inc., No. 15-405, 2018 WL 7815202 (E.D. Pa. Dec. 13, 2018) (DuBois, J.)

The Court subsequently denied Broadridge's motion for summary judgment, reasoning that a genuine dispute of material fact existed as to (1) the meaning of commercially reasonable efforts; (2) the number of clients required to be referred over the term of the contract; (3) whether or not Broadridge breached the contract, in light of the meaning of the disputed contractual terms; (4) whether or not Broadridge acted with gross negligence or willful misconduct; (5) when Mr. Miller was on inquiry notice of a potential fraud claim; and (6) whether Broadridge fraudulently induced Mr. Miller into signing the Stock Purchase Agreement. See Paramount Fin. Commc'ns, Inc. v. Broadridge Inv. Commc'n Sols., Inc., No. 15-405, 2019 WL 3022346 (E.D. Pa. May 23, 2019) (DuBois, J.).

The case then proceeded to trial. Mr. Miller argued that he was fraudulently induced into signing the Stock Purchase Agreement by Broadridge's representations in the Marketing Agreement. Plan Management contended that Broadridge breached the Marketing Agreement with gross negligence and or willful misconduct, entitling it to special, indirect, incidental, and consequential damages. Broadridge argued that it did not fraudulently induce Mr. Miller into signing the Stock Purchase Agreement, and that it fulfilled its contractual obligations under the Marketing Agreement. Following a nine-day trial, the jury found in favor of Plan Management as to liability--that Broadridge breached the contract and did so with gross negligence and willful misconduct.³ After the completion of a brief damages phase of trial, the jury returned a $25,000,000.00 verdict for Plan Management.

III. MOTIONS AS TO LIABILITY

Broadridge has moved for judgment as a matter of law, or, in the alternative, for a new trial. Mr. Miller has moved for judgment as a matter of law as to his fraudulent inducement claim. These motions will be addressed in turn.

A. Broadridge's Motion for Judgment as a Matter of Law⁴

1. Legal Standard

Under Federal Rule of Civil Procedure 50,

If a party has been fully heard on

...