Acadian Diagnostic Lab, L.L.C. v. Quality Toxicolo

965 F.3d 404
CourtCourt of Appeals for the Fifth Circuit
DecidedJuly 13, 2020
Docket19-30320
StatusPublished
Cited by40 cases

This text of 965 F.3d 404 (Acadian Diagnostic Lab, L.L.C. v. Quality Toxicolo) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Acadian Diagnostic Lab, L.L.C. v. Quality Toxicolo, 965 F.3d 404 (5th Cir. 2020).

Opinion

Case: 19-30320 Document: 00515486215 Page: 1 Date Filed: 07/13/2020

IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals Fifth Circuit

FILED No. 19-30320 July 13, 2020 Lyle W. Cayce ACADIAN DIAGNOSTIC LABORATORIES, L.L.C., Clerk

Plaintiff-Appellee / Cross-Appellant,

v.

QUALITY TOXICOLOGY, L.L.C.,

Defendant-Appellant / Cross-Appellee.

Appeals from the United States District Court for the Middle District of Louisiana

Before KING, GRAVES, and OLDHAM, Circuit Judges. ANDREW S. OLDHAM, Circuit Judge: Acadian Diagnostic Laboratories, L.L.C. (“Acadian”) entered into two contracts with Quality Toxicology, L.L.C. (“QT”) to perform lab testing. Their business relationship soon unraveled, and Acadian filed this lawsuit. The jury awarded damages to Acadian, and both sides appealed. QT says it didn’t get to present its full case, so we should remand. And Acadian says it didn’t get enough money, so we should vacate the judgment and replace it. They’re both wrong. We affirm. I. This case involves two agreements between two labs in two States. Acadian operated its lab in Baton Rouge, Louisiana. QT operated its lab in Longview, Texas. Between 2013 and 2015, the labs made two agreements to Case: 19-30320 Document: 00515486215 Page: 2 Date Filed: 07/13/2020

No. 19-30320 create a reciprocal testing arrangement. Under the Acadian Referred Specimens Agreement, Acadian referred urine specimens to QT for testing. QT, in turn, agreed to pay Acadian 50% of all amounts collected for those services, after deducting a charge from Medcross, QT’s billing contractor. Medcross would do all the billing, collect the funds, and deposit them in QT’s account. Then QT would remit to Acadian its share of the funds. Under a second agreement, the QT Referred Specimens Agreement, the referral role flipped: QT agreed to refer specimens to Acadian for testing. As with the first agreement, Medcross billed and collected the funds. And, as with the first agreement, Medcross deposited the collected funds into QT’s account. QT agreed to deduct a charge for Medcross’s services and then remit 65% to Acadian. QT and Acadian performed thousands of tests under these Agreements. But QT refused to send Acadian most of its agreed-to share of the collected funds. For example, Acadian performed lab services under the QT Referred Specimens Agreement on 2,679 specimens. QT collected at least $1,565,428 in payments for those specimens. But QT sent Acadian only $73,134.34—far less than the 65% it owed under that Agreement. QT faced other business difficulties during this time too, which culminated in a “business divorce.” Several of QT’s partners left and new management came in. But the new management still did not remit the funds owed to Acadian. So Acadian sent a demand letter. When QT didn’t respond,

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No. 19-30320 Acadian filed this lawsuit, alleging, among other things, that QT breached both Agreements. 1 The district court granted Acadian partial summary judgment on its breach-of-contract claims. Specifically, the district court found that QT was indisputably liable for breaching both Agreements. But Acadian’s damages were another matter. The district court could not determine the effective date of the Acadian Referred Specimens Agreement, and thus could not determine when Acadian’s damages began to accrue. The court left that question for the jury. As for the QT Referred Specimens Agreement, the court appears to have found no dispute about the damages for 2,027 specimens for which QT failed to pay Acadian. As to those specimens, the district court concluded “that QT owes Acadian the balance due on the QT Referred Specimens [Agreement] of $1,017,528.20, less the $73,134.34 . . . payment.” The court appears to have left for the jury the question of damages for the remaining 652 specimens. The district court also granted Acadian’s motion in limine regarding a joint venture named ToxNet Diagnostic Laboratory Services, L.L.C. QT wanted to present testimony about ToxNet to the jury. But the district court said that evidence would be a “waste of time.” Later, QT attempted to introduce

1 Both Acadian and QT are LLCs. “[T]he citizenship of a[n] LLC is determined by the citizenship of all of its members.” Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1080 (5th Cir. 2008). “So, to establish diversity jurisdiction, a party must specifically allege the citizenship of every member of every LLC.” MidCap Media Fin., L.L.C. v. Pathway Data, Inc., 929 F.3d 310, 314 (5th Cir. 2019) (quotation omitted). Both of Acadian’s members are Louisiana citizens. All the various members of QT and its various corporate parents are citizens of Texas. Thus, complete diversity exists to give the court jurisdiction to hear this state-law dispute. 28 U.S.C. § 1332(a).

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No. 19-30320 evidence regarding Acadian’s partner in the ToxNet venture. The district court again excluded it. The jury awarded Acadian damages for QT’s breach of both Agreements. For the Acadian Referred Services Agreement, QT owed $635,032.23. And for the QT Referred Services Agreement, QT owed $269,706.50. Notably, the jury instructions and the verdict form said nothing about whether the QT Referred Services Agreement damages were for all specimens or just the 652 specimens on which the district court denied summary judgment. Shortly after the jury verdict, Judge Brady, who had presided over the case, passed away. The case remained open on the docket for fifteen more months until then-Chief Judge Jackson entered final judgment for Acadian. The final judgment said nothing about Judge Brady’s earlier summary judgment opinion or his damages calculation. Instead, the judgment only reflected the jury’s verdict. Acadian’s counsel filed for his attorney’s fees but did not file any post-trial motions about this apparent inconsistency. QT filed a motion for a new trial, but it was denied. Both parties timely appealed. II. We start with QT. First, QT argues the district court incorrectly granted summary judgment on its liability for breaching the Agreements. Second, QT argues the district court erroneously stopped it from introducing evidence about Acadian’s business dealings. Neither contention merits a new trial. A. We review the district court’s grant of partial summary judgment de novo. Smith v. Reg’l Transit Auth., 827 F.3d 412, 417 (5th Cir. 2016). As this case implicates our diversity jurisdiction, we apply Louisiana law to review

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No. 19-30320 QT’s liability for breaching both Agreements. Am. Elec. Power Co. Inc. v. Affiliated FM Ins. Co., 556 F.3d 282, 285 & n.2 (5th Cir. 2009). QT Referred Specimens Agreement. QT argues that the QT Referred Specimens Agreement does not obligate it to remit any money at all. Although QT, through Medcross, in fact collected funds for these services, QT says the Agreement actually required Acadian to collect its own bills. And hence, QT contends, it did not breach the Agreement by failing to remit Acadian’s money. The disputed provision required Acadian to use “its customary billing practices.” To interpret this provision under Louisiana law, we must “determin[e] . . . the common intent of the parties.” LA. CIV. CODE ANN. art. 2045. And “[t]he language of the [contract] is the starting point for determining that common intent.” Six Flags, Inc. v. Westchester Surplus Lines Ins.

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Bluebook (online)
965 F.3d 404, Counsel Stack Legal Research, https://law.counselstack.com/opinion/acadian-diagnostic-lab-llc-v-quality-toxicolo-ca5-2020.