The Hurry Family Revocable Tr. v. Frankel

1

THE HURRY FAMILY REVOCABLE TRUST, SCOTTSDALE CAPITAL ADVISORS CORPORATION and ALPINE SECURITIES CORPORATION, Plaintiffs, v. CHRISTOPHER FRANKEL, Defendant.

No. 8:18-cv-2869-CEH-CPT

United States District Court, M.D. Florida, Tampa Division

August 8, 2022

ORDER

CHARLENE EDWARDS HONEYWELL UNITED STATES DISTRICT JUDGE

This matter comes before the Court upon Frankel's Renewed Motion for Judgment as a Matter of Law or Alternatively for a New Trial [Doc. 328], Plaintiffs' Opposition [Doc. 332] Frankel's Reply in Support of Judgment as a Matter of Law [Doc. 343], and the arguments of counsel at the hearing on February 25, 2022. In his motion, Defendant Christopher Frankel argues that he is entitled to judgment as a matter of law because Plaintiffs' Alpine and Scottsdale had no trade secrets; no evidence showed he was unjustly enriched through misappropriating the purported trade secrets; and the award was patently unjust. [Doc. 328 at p. 1]. The Court having considered the motion and being fully advised in the premises, will DENY Frankel's Renewed Motion for Judgment as a Matter of Law or Alternatively for a New Trial.

I. BACKGROUND

Plaintiffs, Scottsdale Capital Advisors and Alpine Securities Corporation are each involved in the broker-dealer business. [Doc. 61 ¶ 10]. Scottsdale is a full-service broker-dealer focused on serving the OTC (over-the-counter) securities market. Id. Alpine is a registered broker-dealer that is an industry leader for clearing OTC stock. Id. Scottsdale and Alpine were previously indirectly owned and/or controlled by Plaintiff, The Hurry Family Revocable Trust. Id. Defendant Christopher Frankel served as Alpine's CEO from approximately July 2015 through July 2018, and then as a consultant from July 2018 through September 2018. Id. ¶ 17. He joined Vision Financial Markets, LLC, in June 2019 as VP/Managing Director of Corporate Services Group and Correspondent Services. [Doc. 316 at 87:3-10].

In this action, Plaintiffs asserted claims against Defendant for breach of contract and misappropriation of trade secrets in violation of the Defend Trade Secrets Act and the Florida Uniform Trade Secret Act. [Doc. 61].^[1] Defendant filed counterclaims for declaratory judgment-that he did not breach the agreements at issue or misappropriate Plaintiffs' trade secrets and/or confidential information-and malicious prosecution.^[2] [Doc. 95]. Defendant moved for summary judgment on August 23, 2019, and the motion was denied on November 25, 2019. [Docs. 114, 139].

The matter was tried before a jury over five days, from April 26, 2021, through April 30, 2021. [Docs. 315, 316, 317, 318, 319]. At the conclusion of the evidence, Defendant moved for a directed verdict, arguing Plaintiffs failed to prove damages and the existence of trade secrets. [Doc 318 at 248:16-249: 17]. The court reserved ruling pending a verdict. Id. at 254: 20-255: 3. The jury returned a verdict for Defendant on the breach of contract claims and for Plaintiffs as to misappropriation of trade secrets.^[3][Doc. 302]. As to the breach of contract claims, the jury found that Defendant had breached obligations under the contracts but had caused no damage to Plaintiffs. Id. at pp. 1-4. The jury also found that Defendant's misappropriation of trade secrets did not cause any damage, but they found that Defendant had been unjustly enriched in the amount of $932,000 as a result. Id. at pp. 4-5. The Court therefore entered a judgment in favor of Defendant on the breach of contract claims and in favor of Plaintiffs for misappropriation of trade secrets. [Doc. 304].

Defendant has renewed his motion for judgment as a matter of law and, in the alternative, seeks a new trial. [Doc. 328]. He argues that he is entitled to judgment as a matter of law because Plaintiffs Alpine and Scottsdale had no trade secrets; they failed to prove, and no evidence showed, that he obtained any unjust enrichment through misappropriation of their alleged trade secrets; and the jury awarded a patently incorrect amount for their unsupported, unjust enrichment award. Id. at p. 1. He specifically identifies four documents-the loan term sheet loan [Doc. 369-9]; Ken Ralston's draft employment agreement [Doc. 369-10]; Alpine's list of top 50 clients based on commissions paid during the first half of 2018 [Doc. 369-12]; and JX 5, the anonymous blotter [Doc. 369-16]-and explains why each is not a trade secret. Id. at pp. 21-22. As to the award of unjust enrichment, Defendant argues that no evidence showed he used any alleged trade secret to enrich himself; how he enriched himself; when he did so; and what compensation he received as a result. Id. at pp. 23-24. Lastly, he argues that the amount awarded for unjust enrichment, $932,000, is patently incorrect as it is the amount Plaintiffs had claimed as actual damages. Id. at p. 24. In fact, he argues that Plaintiffs failed to prove the alleged misappropriation generated any compensation over any period of time. Id. at p. 24. Lastly, he argues that he is entitled to a new trial because Plaintiffs ambushed him at trial with damage calculations and methodology that was not disclosed prior to trial and chose to exclude his witnesses who could refute their claim. Id. at pp. 24-25.

In their response, Plaintiffs contend that because overwhelming evidence supported their claims, the Court was required to submit them to the jury. [Doc. 332 at p. 2]. More specifically, Plaintiffs point to evidence that they spent considerable resources over the years to develop and improve the documents Defendant took and that these documents would provide a tremendous advantage to someone trying to start their own broker dealer-business. Id. at pp. 3-7. They also point to evidence of the various methods they employed to protect this information. Id. at p. 7. On the issue of unjust enrichment, Plaintiffs contend that the documents Defendant took from them provided him with a huge advantage in starting the Corporate Services Group for his new employer, Vision Financial Markets, LLC, and he used the information to lure customers to Vision, thereby enriching himself unjustly. Id. at pp. 8-10. As to the amount awarded for unjust enrichment, they contend that they are required to prove the amount of such loss with only as much certainty as is reasonable under the circumstances and based on the evidence regarding revenue generated from Chicago Venture Partners, Iliad Research, and St. George Investments for the period from July 9, 2019, until April 30, 2021, a jury could reasonably conclude that $932,000 fairly represents the value of the top 50 customer list, especially when combined with some of the other trade secret information taken by Defendant. Id. at pp. 10-13.

Plaintiffs further contend that there is no legitimate basis for a new trial as they repeatedly explained their damages theory throughout the case. Id. at p. 2. They explain that Defendant was not ambushed by their damages theory as he knew from the onset of the case that they were seeking unjust enrichment damages; they explained in the Joint Pretrial Statement how they would prove unjust enrichment; reiterated their damages theory at a hearing on a motion for sanctions and to reopen discovery; and argued at the June 26, 2020 hearing on Defendant's motion in limine that they were justified in failing to disclose damages calculations pursuant to Rule 26 because Defendant had obstructed discovery on the issue, again indicating their intent to use Vision documents and questions from Frankel's second deposition in establishing unjust enrichment. Id. at pp. 14-18. Furthermore, Plaintiffs specifically contend that Defendant worked diligently to prevent them from discovering damages information and this substantially justified their failure to disclose a damages calculation, to the extent they were required to do so. Id. at pp. 18-19. At the same time, Plaintiffs contend that Defendant did not disclose experts Jarvis or Fife in his Rule 26 disclosures and substantial portions of their testimony would have been inadmissible as hearsay, so the Court was well within its discretion to exclude them. Id. at pp. 19-20. Plaintiffs further contend that there is no basis to conclude their testimony would have had any significant impact on the outcome of the case such that Defendant was prejudiced by their exclusion. Id. at p. 20.

II. LEGAL STANDARD

Federal Rule of Civil Procedure 50(a) permits the court to grant judgment as a matter of law against a party “[i]f a party has been fully heard on an issue during a jury trial and the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue.” Fed.R.Civ.P. 50(a). Pursuant to rule 50(b), a party may renew a motion for judgment as a matter of law after trial, if such a motion is filed no later than 28 days after entry of judgment. Fed.R.Civ.P. 50(b). A court may grant a motion for judgment as a matter of law only if, after examining “all evidence in a light most favorable to the non-moving party,” it determines that “there is no legally sufficient evidentiary basis for a reasonable jury to find” for that party. Aronowitz v. Health-Chem. Corp., 513 F.3d 1229, 1236-37 (11th Cir. 2008); Luxottica Grp., S.p.A. v. Airport Mini Mall, LLC, 932 F.3d 1303, 1310-11 (11th Cir. 2019); Cleveland v. Home Shopping Network, Inc., 369 F.3d 1189, 1192 (11th Cir. 2004).

In conducting a Rule 50 analysis, the court must refrain from invading the province of the jury. Indeed “[c]redibility determinations, the weighing of evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.” Cleveland, 369 F.3d at 1193. A court may “not second-guess the jury or substitute” its judgment for...