Cool Light Company v. GTE Products Corp.

• Court: Court of Appeals for the First Circuit
• Decided: August 21, 1992
• Docket: 92-1082
• Status: Published

Opinion

USCA1 Opinion

August 21, 1992     UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                 ____________________

No. 92-1082

                              COOL LIGHT COMPANY, INC.,

                                Plaintiff, Appellant,

                                          v.

                              GTE PRODUCTS CORPORATION,

                                 Defendant, Appellee.

                                 ____________________

                                     ERRATA SHEET

The opinion of  this Court issued on  August 21, 1992,  is amended
        as follows:

            On  cover  under list  of  counsel  "Edward  A.  McCabe should  be
        corrected to read "Edwin A. McCabe."

        August 21, 1992     UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                 ____________________

No. 92-1082

                              COOL LIGHT COMPANY, INC.,

                                Plaintiff, Appellant,

                                          v.

                              GTE PRODUCTS CORPORATION,

                                 Defendant, Appellee.

____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                     [Hon. Robert E. Keeton, U.S. District Judge]
                                             ___________________

____________________

                                        Before

                                 Breyer, Chief Judge,
                                         ___________
                             Lay,* Senior Circuit Judge,
                                   ____________________
                          and O'Scannlain,** Circuit Judge.
                                             _____________

                                 ____________________

            Edwin A. McCabe  with whom Joseph P. Davis, III, Karen Chinn Lyons
            _______________            ____________________  _________________
        and The McCabe Group were on brief for appellant.
            ________________
            Alan van Gestel with whom Marie P.  Buckley and Goodwin, Procter &
            _______________           _________________     __________________
        Hoar were on brief for appellee.
        ____

____________________

____________________

        _____________________

        *  Of the Eighth Circuit, sitting by designation.
        ** Of the Ninth Circuit, sitting by designation.

LAY, Circuit Judge.  This is an unusual and perplexing case.
               LAY  _____________
          Cool  Light  Company, Inc.  (Cool  Light) sought  to  develop and

          produce a new and superior light system for television and movies
          which  would emit less heat, would last longer, and would produce

          better color quality on film.  The lights, not surprisingly, were
          to  be  called  "cool  lights."   Cool  Light's  founder,  George

          Panagiotou, obtained all rights to the lighting concept and  took
          his idea  to Hollywood where he  founded Cool Light in  1977.  In

          1978,  Panagiotou  was looking  for a  new supplier  of specially
          coated  reflectors  needed  to  produce  cool  lights.    He  was

          approached  by  GTE Products  Corporation  (GTE)  to produce  the
          reflectors  and  the   two  parties  entered   into  a   business

          relationship which continued throughout 1979 and 1980.

Dissatisfaction arose over the  supply of coated reflectors,
          both  in number and in  quality, and problems  arose over amounts

          owed by Cool Light to GTE.  Cessation of supply resulted and Cool
          Light, facing a  severe cash shortage,  ultimately was forced  to

          sell off its assets and became insolvent.

Cool Light sued GTE  on a number of claims,  including beach
          of  contract, breach of implied  covenant of good  faith and fair

          dealing,  and fraud.  After a twenty-four day trial, the district
          court1 submitted to the jury a  number of special interrogatories

          in  addition  to   general  verdict  forms.     On  the   special
          interrogatory  form, the jury found, inter alia: (1) GTE had made
                                               __________

          a  false representation to Cool  Light that it  could produce the
          number and quality of reflectors required, (2) Cool Light  relied

          upon that misrepresentation, (3)  Cool Light and GTE had  both an
          oral and written agreement, and (4) GTE's actions cost Cool Light

          $9.3 million in loss  of potential profits.  The  general verdict
          forms, however, indicated  that Cool Light was due $3.694 million

          on  the breach of  contract claim, $2.8 million  on the breach of
                              
          ____________________

          1The Honorable John J. McNaught, presiding.

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                                          2

implied  covenant of good faith  claim, and $9.45  million on the
          fraud claim.   After the  jury returned the  verdict and  special

          interrogatories,  the court sent the jury back into the jury room
          to  decide how much, if any,  of the fraud damages were punitive.

          The  jury  returned with  the  answer  that  $2.95  million  were
          compensatory  in  nature and  $6.5  million  represented punitive

          damages permitted under California law.

In  addition to the above,  the jury returned  a verdict for
          GTE on all other counts, including common law misappropriation of

          trade secrets, misappropriation of trade secrets under Mass. Gen.
          L.  ch. 93,    42 (1990),  misappropriation of  information under

          section   759   of  the   Second   Restatement   of  Torts,   and
          misappropriation of  trade secrets  under the  California Uniform

          Trade Secrets Act, Cal. Civ. Code   3426 (West 1992).2   The jury
          also found against  GTE on  a counterclaim.   An additional  five

          counts, consideredto besounding inequity, weretried by thecourt.3
                              
          ____________________

          2The record is confusing  as to whether this count  was submitted
          to the jury.   In Judge McNaught's August 9,  1990 memorandum and
          order he states that the count was submitted to the jury and that
          it found  in favor  of GTE.   Judge  McNaught also  included this
          count in the  list of those he intended to be retried.  The final
          judgment entered December 11,  1991, however, indicates that this
          count was withdrawn before trial.  There is some evidence on  the
          record that  the California statute was not in effect at the time
          the alleged misconduct occurred.

          3Cool Light challenges the  trial court's ruling in favor  of GTE
          on  Cool Light's  claim  that GTE  violated  Chapter 93A  of  the
          General Laws  of the  Commonwealth of Massachusetts,  which makes
          unlawful any "[u]nfair . . .  acts or practices in the conduct of
          any trade  or commerce . .  . ."  Mass.  Gen. L. ch.  93A,   2(a)
          (1990).    Cool Light  argues that  the  jury's finding  that GTE
          violated  the implied  covenant of  good faith  and fair  dealing
          required the court as a  matter of law to find that  GTE violated
          Chapter  93A.    Cool Light  cites  Anthony's  Pier  Four v.  HBC
                                              _____________________________
          Associates,  583 N.E.2d  806  (Mass. 1991),  in  support of  this
          __________
          argument.   In  Anthony's,  the trial  court  found in  favor  of
                          _________
          plaintiff on its ruling  that defendant had violated  the implied
          covenant of good  faith and  fair dealing, but  the court  denied
          plaintiff's  claim under Chapter 93A.  The Supreme Judicial Court
          of  Massachusetts found that those  rulings could not be squared,

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                                          3

The district court granted GTE's motion for new trial on all
          of   the  counts  submitted  to   the  jury.    Thereafter,  upon

          stipulation the parties submitted only the  three counts on which
          the jury  found in Cool  Light's favor.  These  three counts were

          then  submitted to  a new  trial judge,  the Honorable  Robert E.
          Keeton, and  a jury  trial was  waived.   It was stipulated  that

          certain witnesses would testify, and that Judge Keeton would make
          his findings  and  conclusions  of law  based  upon  his  overall

          appraisal of the  record of  the first trial  and any  additional
          evidence presented  before him.    Judge Keeton  entered a  final

          judgment against  Cool Light  on all  counts and dismissed  GTE's
          counterclaim.  He did  so based upon  a thorough analysis of  the

          evidence, finding that Cool  Light did not sustain its  burden of
          proof relating to breach of contract, fraud, or breach of implied

          covenant  of good faith and fair  dealing.  He further found Cool
          Light's  evidence  as   to  loss  of   profits  to  be   entirely

          speculative.   Upon  entry  of final  judgment,  Cool  Light  has
                              
          ____________________

          and that defendant as a matter of law violated Chapter 93A.

               Anthony's is  distinguishable from  the present case  in two
               _________
          important respects.  First,  the jury finding against GTE  on the
          implied covenant of  good faith  count was vacated  by the  trial
          court  and submitted for retrial.  Under these circumstances, the
          jury's   finding  cannot   be  binding   on  the   trial  court's
          determination under Chapter 93A.  

               Second, the  trial court made separate findings  of fact and
          conclusions  of law with  respect to the Chapter  93A claim.  The
          court  specifically found  (1) GTE  exerted its  best efforts  at
          producing the reflectors requested by Cool  Light; (2) no binding
          contract existed  between Cool Light  and GTE;  (3) no  agreement
          existed between the two parties except that GTE would not divulge
          Cool Light's  specifications to  another GTE customer;  (4) GTE's
          conduct should  be viewed  as simply  refusing to  continue doing
          business  with a  company that  would  not or  could not  pay its
          bills;  and  (5)  Cool  Light's  evidence  on  lost  profits  was
          unpersuasive.  The  court also  made findings as  to the lack  of
          credibility  of certain  Cool Light  witnesses,  including George
          Panagiotou.  

               We therefore find no error with respect to the trial court's
          dismissal of Cool Light's claim under Chapter 93A.

                                         -4-
                                          4

appealed only the  grant of a  new trial by  Judge McNaught.   It
          seeks to sustain the money damage  award set forth in the  jury's

          original verdict.

Cool  Light  argues  that the  trial  court  had  a duty  to
          reconcile the apparent inconsistency between the verdict and  the

          special  interrogatory answer  pertaining to  Cool Light's  total
          lost profits, and that the court abused its discretion by failing

          to  enter judgment  in its  favor.   We  agree with  Cool Light's
          assertion  that the  trial  court had  a  duty to  reconcile  any

          inconsistency between the  general verdict and the answers to the
          special  interrogatories.4   The record  is clear,  however, that

          Judge  McNaught did  attempt  to reconcile  the inconsistency  he
          perceived and concluded that he could not:

And I have struggled in vain to come up with a sensible
               mode of determining how the jury would have struck upon
               different  figures of $3,550,000  [sic], $2,950,000 and
               $2,800.000 [sic].  It would have  been easier (and more
               understandable) had the  jury simply divided $9,300,000

____________________

          4See, e.g., Harvey v.  General Motors Corp., 873 F.2d  1343, 1347
           _________  _______________________________
          (10th Cir. 1989); Schaafsma v. Morin Vermont Corp., 802 F.2d 629,
                            ________________________________
          635  (2d Cir.  1986); 9  Charles  A. Wright  & Arthur  R. Miller,
          Federal  Practice and  Procedure    2513, at  528-29 (1971);  cf.
          ________________________________                              ___
          Gallick v. Baltimore &  Ohio R.R. Co., 372  U.S. 108, 119  (1963)
          _____________________________________
          (duty to  reconcile answers to  special interrogatories); O'Brien
                                                                    _______
          v.  Papa Gino's of  America, 780 F.2d 1067,  1071 (1st Cir. 1986)
          ___________________________
          (same).

               Cool Light  also urges that  GTE is barred  from challenging
          any  inconsistency between the  special interrogatory answers and
          the  verdict  because of  its failure  to  object on  this ground
          before  the jury was discharged.   See Fernandez  v. Chardon, 681
                                             ___ _____________________
          F.2d 42, 58  (1st Cir.) (failure to object  to jury verdict under
          Rule 49 prior to discharge  of the jury waives right  to appeal),
          cert. denied, 459 U.S.  989 (1982); Skillin v. Kimball,  643 F.2d
          ____________                        __________________
          19 (1st Cir.  1981).   As Judge Keeton  observed, however,  Judge
          McNaught  did not  base his grant  of a  new trial  solely on the
          inconsistency  of the  special  interrogatories  and the  general
          verdict.  Thus, the  waiver rule recognized in this  circuit with
          respect to Rule 49(b) does not apply here.

                                         -5-
                                          5

by three and given $3,100,000 for lost profits on  each
               count.  They did not do so.

                    . . . .

In sum, one  must speculate in order to assess the
               work of the  jury.  And that's wrong.  If the plaintiff
               deserved  a particular sum  of money, he  should not be
               required to  be satisfied with a dollar  less than that
               amount.  Neither should  he receive a dollar more  than
               he deserves.  On the present state of affairs, we don't
               know what he deserves.

                    There  must  be  a  new  trial.    Of  that  I  am
               satisfied.   It  seems to  me also  that the  new trial
               should be  had on all  the counts which  were submitted
                                 ___
               for the  jury's determination:  not only on  the counts
               where the jury found in plaintiff's favor, but on those
               counts where the jury  decided against him.  We  cannot
               know  for the  moment precisely  what evidence  will be
               offered  and admitted  at a  new trial.   If,  in fact,
               there is  admissible evidence which  makes a  different
               impression  on the  jurors'  minds,  plaintiff may  (be
               entitled  to and  may) prevail  on one  or more  of the
               counts  on which  this past  jury decided  adversely to
               him.

Cool Light Co.  v. GTE Products Corp., No. 86-2668Mc,  at 4-5 (D.
          _____________________________________
          Mass. August 9, 1990) (memorandum and order on proposed orders of

          judgment and on motion for judgment n.o.v.).   

Cool  Light's argument  that the verdict  and answer  can be
          reconciled  hinges  upon its  assumption  that  the jury  awarded

          separate and distinct  damages for each  count; that each  damage
          award can be causally related to a separate breach of duty.  Cool

          Light  further  urges  that  although  the  compensatory  damages
          awarded  on the general verdict  forms add up  to $9,444 million,

          the  extra  $144,000  can be  explained  as  some  other form  of
          compensatory damages, such as out-of-pocket expenses.

The difficulty  with this argument is that  the trial record

          fails  to support  the theory  that each  claim was  supported by

                                         -6-
                                          6

separate  damages.   The  trial court  recognized throughout  the
          trial that plaintiff's  counts were alternative  counts.  In  the

          instructions to the jury, the court explained:

There are  cases in  which somebody has  more than
               one  arrow to  fire; and  this is  one of  those cases.
               When Mr. Panagiotou brought his case as against GTE, he
               decided that he ought to have 12 arrows to fire.  So he
               stated what  we call 12  theories of liability  at law.
               And you're entitled to do that.  When you bring a  case
               in our courts you may  say I want to recover  either on
               the  basis of tort or recover on the basis of contract.
               And  if you  can prove  the  essential elements  of any
               theory of  liability, then you're  entitled to recover.
               That's called alternative pleading.

Trial  Transcript, Vol. 24, at 10.  These instructions made clear
          the  alternative nature  of  Cool Light's  case,  and Cool  Light

          itself never spelled out any basis for finding  separate damages.
          The law is clear that a  party cannot recover multiple awards  of

          damages for  a single harm.  Clark v. Taylor,  710 F.2d 4, 8 (1st
                                       _______________
          Cir.  1983)  ("[T]he  amount  of  compensatory  damages  properly

          awardable does not depend  on the number of theories  under which
          plaintiff  may recover, but on  the extent of  his injury."); see
                                                                        ___

          also Diversified Graphics, Ltd. v. Groves, 868 F.2d 293, 295 (8th
          ____ ____________________________________
          Cir.  1989); Clappier v. Flynn,  605 F.2d 519,  529-30 (10th Cir.
                       _________________

          1979); Cunningham v. M-G Transp. Serv., 527 F.2d 760, 761-62 (4th
                 _______________________________
          Cir. 1975).

Thus, not  only is the  answer to the  special interrogatory

          inconsistent with the general  verdicts, but the general verdicts
          are  inconsistent  with one  another.   In  addition, we  find it

          significant  that  in  considering  the  non-jury  claims   Judge
          McNaught found no breach  of contract, lack of good  faith on the

          part of at  least one  of the plaintiff's  witnesses, failure  to
          prove  fraud,  and failure  to prove  damages.   We  mention this

          background  because  Judge McNaught  observed  in  his new  trial
          order:

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                                          7

I  considered  granting   judgment  non   obstante
               veredicto on one or more of the counts of the complaint
               which  were given  to the  jury for  determination, and
               decided against it, since,  if a new trial  is granted,
               new  evidence might be offered.  There is also the fact
               that even  if I act in that  fashion, we are still left
               to  speculate  concerning  the  award  of damages,  the
               source of the amounts decided upon by the jury, and the
               possibilities that  the jury came  up with inconsistent
               amounts, or amounts that  were divided among the counts
               improperly.

Cool Light Co.  v. GTE Products Corp., No. 86-2668Mc,  at 4-5 (D.
          _____________________________________
          Mass. August 9, 1990) (memorandum and order on proposed orders of

          judgment  and on  motion for  judgment n.o.v.).   Thus,  as Judge
          Keeton later observed:

[E]ven if  I assume  that  there was  an  inconsistency
               between the general verdict and the jury's response  to
               special interrogatory  number 14, . .  . I nevertheless
               conclude that  the order  for new  trial should  not be
               vacated.   Plaintiff has  made  no showing  that  Judge
               McNaught abused his discretion by ordering a new  trial
               in light of  his concerns about the verdict  apart from
               the inconsistency issue.  In the absence of any showing
               that Judge McNaught's order for new trial was a clearly
               erroneous  exercise  of  his   discretion--taking  into
               consideration all of his expressed reasons for ordering
                             ___
               the new  trial--the order  for new  trial  will not  be
               vacated,  and  plaintiff's  motion for  reconsideration
               will be denied.

Cool  Light Co. v. GTE Products  Corp., No. 86-2668-K, at 4-5 (D.
          ______________________________________

          Mass. July 25, 1991) (memorandum and order) (citation omitted).

This inconsistency among the general verdicts also precludes
          Cool Light's argument that the trial  court abused its discretion

          in failing to enter judgment on the special answer.   While it is
          true that  a trial court may  enter judgment on the  answer where

          there  is  an inconsistency  between  the general  verdict  and a

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                                          8

special interrogatory  answer,5 there  is no abuse  of discretion
          in  failing to do so where the verdicts evidence either confusion

          or improperly duplicative awards.

We are mindful of  plaintiff's Seventh Amendment concerns in
          vacating  a jury  verdict.   Yet  there  exists no  violation  of

          Seventh Amendment rights where a trial judge exercises his lawful
          discretion  in  awarding  a  new  trial  where  speculation   and

          confusion  are  manifest  in   not  only  the  verdict   but  the
          evidentiary  record itself.  See  Globe Liquor Co.  v. San Roman,
                                       ___  ______________________________

          332  U.S. 571 (1948);  Montgomery Ward & Co.  v. Duncan, 311 U.S.
                                 ________________________________
          243 (1940); Kavanaugh  v. Greenlee Tool Co., 944  F.2d 7, 10 (1st
                      _______________________________

          Cir. 1991); MacQuarrie v.  Howard Johnson Co., 877 F.2d  126, 131
                      _________________________________
          (1st Cir.  1989)  ("[t]rial  courts  have  wide  discretion  when

          considering  a motion for a new trial"); Atlantic Tubing & Rubber
                                                   ________________________
          Co. v.  International Engraving  Co.,  528 F.2d  1272, 1276  (1st
          ____________________________________

          Cir.) (broad discretion to order new trial "encompasses the power
          to   refuse    to   accept   a   jury's    answers   to   special

          interrogatories."), cert.  denied, 429 U.S. 817  (1976); 6A James
                              _____________
          W.  Moore & Jo Desha  Lucas, Moore's Federal  Practice   59.04[2]
                                       _________________________

          (2d ed.  1991).  A judge  should not enter judgment  on a verdict
          where it is impossible  to understand the jury's intentions.   To

          do so would make a mockery of the Seventh Amendment right of jury
          trial.

We fully recognize  the disappointment to  the plaintiff  in

          what  appeared to be a  vindication of plaintiff's  rights in the
          form of a multimillion dollar verdict.  Yet, to obviate confusion

          and to improve  upon significant evidentiary gaps, Cool Light was
          given a second  trial before a  highly competent and  fair-minded

          judge.   His thorough analysis in finding  plaintiff's failure of
                              
          ____________________

          5Fed. R. Civ. P. 49(b); Stoddard v. School Dist. No.  1, 590 F.2d
                                  _______________________________
          829, 834 (10th Cir. 1979); Nimnicht v. Dick Evans, Inc., 477 F.2d
                                     ____________________________
          133, 135  (5th Cir. 1973); Elston v. Morgan, 440 F.2d 47, 49 (7th
                                     ________________
          Cir. 1971).

                                         -9-
                                          9

proof is totally justified by the record.  We are convinced  from
          our own review of the record that Judge McNaught's grant of a new

          trial  was not  a miscarriage of  justice.   We find  no abuse of
          discretion in his ruling.

Judgment affirmed.

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