Avery Dennison Corp. v. Four Pillars Enterprise Co.

45 F. App'x 479
CourtCourt of Appeals for the Sixth Circuit
DecidedSeptember 3, 2002
DocketNos. 00-4020, 00-4128, 00-4233
StatusPublished
Cited by28 cases

This text of 45 F. App'x 479 (Avery Dennison Corp. v. Four Pillars Enterprise Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Avery Dennison Corp. v. Four Pillars Enterprise Co., 45 F. App'x 479 (6th Cir. 2002).

Opinion

PER CURIAM.

Four Pillars (FP) appeals the jury verdict and the district court’s denial of judgment as a matter of law and remittitur in this combined RICO and state law action for misappropriation of trade secrets, unjust enrichment, civil conspiracy, unfair competition, and conversion brought by Avery Dennison Corporation. FP argues that the district court abused its discretion by failing to screen the methodologies and factual foundations of Avery’s witnesses for scientific acceptability. FP also asserts that the judge abused his discretion [482]*482by not severing the trial of co-eonspirator Tenhong Lee from the FP trial. Finally, FP alleges that the jury award of both state-law and RICO damages was improperly duplicative, that the judge incorrectly determined that the jury meant to impose damages separately for misappropriation and for other state law claims, that the jury verdict was excessive, and that the judge erred in failing to grant a remittitur of damages.

Because the “facts” that FP believes the district court should have reviewed for scientific veracity are rather the underlying questions of liability in the case, we affirm the decision of the district court to allow the expert witness testimony. We also affirm the district court’s refusal to sever the trial, because defendants did not join the motion to sever when it was originally made. Finally, we affirm the jury verdict as correctly calculated, and affirm the district court’s decision to refuse remittitur, because the jury verdict was not based on mistake or so excessive as to shock the conscience.

II

Avery Dennison is the world leader in the creation of pressure-sensitive adhesive labels; the company invests considerable time and effort in researching new adhesive products. In 1996, Avery discovered that FP, a Taiwanese competitor, was paying Avery scientist Dr. Tenhong Lee to provide FP with Avery adhesive formulas, manufacturing techniques, product specifications, and other fruits of Avery’s research.

Avery contacted the FBI. The FBI confronted Lee after they videotaped him stealing confidential Avery documents. Lee confessed to stealing Avery formulas and other confidential information for eight years, and passing them on to FP.

On September 4, 1997, the FBI arranged and videotaped a meeting between Lee, P.Y. Young, Chairman of FP, and Sally Yang, an FP manager. The videotape showed Young accepting Avery confidential materials, removing Avery’s confidential markings from the materials, and discussing how Four Pillars could use the information, and what sorts of thefts Lee should make next. Young and FP were convicted of conspiracy and attempt to violate the Economic Espionage Act, 18 U.S.C. § 1832(a)(4),(5).

Avery then brought suit against Lee and FP for (1) violation of the Racketeer Influenced and Corrupt Organization Act (RICO), 18 U.S.C. §§ 1962(c) and 1964(c); (2) conspiracy to violate RICO; (3) conspiracy; (4) misappropriation of trade secrets; (5) unfair competition; (6) conversion; and (7) unjust enrichment. Avery also sued Lee for fraud. Avery settled with Lee before trial. The settlement was partial: Lee conceded liability, and Avery agreed to limit the damages for which Lee could be held accountable to $160,000. Lee also agreed, as part of the settlement, to testify on Avery’s behalf as to the nature and extent of the conspiracy.

At trial, Avery produced expert and lay testimony in support of its claim that FP used Avery manufacturing procedures (compounding specifications) and formulas in making and modifying adhesive products, and in overhauling its research and manufacturing methods. FP did not produce exact copies of Avery products, nor did it bring directly competing products to market; rather, as Young stated on the FBI videotape, “[a]s a research institute, we do not need to copy the thing. We can modify it.” In all, FP misappropriated 71 formulas and matching manufacturing instructions for Avery products. FP made multiple copies of these formulas, and attempted to reproduce the formulas. FP [483]*483successfully copied Avery’s S-246 flagship label adhesive, and modified it. Five copies of the compounding specification for S-246 and four copies of an S-246 laboratory notebook page were in FP’s files. FP also received research memoranda concerning upcoming products and Avery’s newly developed “high speed release” manufacturing techniques. Lee gave FP two Avery research reports, multiple copies of which were found in FP’s files. Lee stressed to FP that the reports were /’’extremely confidential” and were the “fruit of painstaking work of Avery Research Center over a period of several years.” FP obtained copies of a confidential Avery report on 5-roll coating; FP purchased a 5-roll coater and used it to create new products.

FP also obtained and used Avery’s specifications for the paper used in its adhesive labels. FP introduced new thermal label products after Lee provided it with thermal label paper specifications and supplier information. Lee also provided FP with Avery’s test methods. FP removed references to Avery, and distributed the methods for use in its R & D laboratory.

Based on their opinions that FP had misappropriated Avery secrets, Avery’s witnesses proposed several theories for the calculation of damages to which FP objected. John Neels, an Avery damages witness, presented three theories of recovery: defendant’s profits, defendant’s avoided costs, and reasonable royalty.

The jury returned a verdict in Avery’s favor. The verdict included $10 million on Avery’s RICO claims; $10 million on the misappropriation claim; $10 million on the civil conspiracy and conversion claims; $25 million in punitive damages; $5 million against Young personally; and $160,000 against Lee. The district court tripled the RICO award under 18 U.S.C. § 1964(c). The total jury verdict was for $81,358,110, including attorneys’ fees and costs. FP then appealed the matter to this court.

A. Daubert and Expert Testimony

We review a district court’s ruling on the admissibility of expert testimony for an abuse of discretion. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999). Rule 702 of the Federal Rules of Evidence states:

If scientific, technical or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of rehable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.

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45 F. App'x 479, Counsel Stack Legal Research, https://law.counselstack.com/opinion/avery-dennison-corp-v-four-pillars-enterprise-co-ca6-2002.