United States Court of Appeals For the First Circuit
No. 19-1658
ITYX SOLUTIONS AG,
Plaintiff, Counter Defendant, Appellee,
ITYX SYSTEMWICKLUNG OHG; ITYX TECHNOLOGY GMBH; SULEYMAN ARAYAN; HEIKO GROFTSCHIK,
Counter Defendants,
v.
KODAK ALARIS, INC.,
Defendant, Counter Plaintiff, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Allison D. Burroughs, U.S. District Judge]
Before
Howard, Chief Judge, Lynch and Barron, Circuit Judges.
Pieter Van Tol, with whom Garima Malhotra, Marisa H. Lenok, Hogan Lovells US LLP, Paul R. Mastrocola, Andrea L. Martin, and Burns & Levinson LLP were on brief, for appellant. Johnathan K. Levine, with whom Elizabeth K. Levine, Pritzker Levine LLP, Scott R. Magee, and Morse, Barnes-Brown & Pendleton, PC were on brief, for appellee. February 27, 2020 LYNCH, Circuit Judge. This appeal primarily concerns
attacks on a verdict against Kodak Alaris, Inc. ("Kodak") based on
the jury finding that Kodak was in breach of its contractual
obligation to ITyX Solutions AG ("ITyX"). Judgment was entered
against Kodak in the sum of $9,211,699.20, including prejudgment
interest. Kodak also challenges whether ITyX had what Kodak called
"standing" to bring a breach of contract claim, the rulings the
district court made following the verdict, the district court's
calculation of prejudgment interest, and the denial of Kodak's
motion for a new trial.
In brief, Kodak contracted with ITyX to sell ITyX's
intelligent document recognition ("IDR") software as part of a
Kodak-branded software. The contract allowed either party to
terminate the agreement following a material breach by the other
party and also prohibited Kodak from reentering the IDR business
within two years of Kodak's "abandon[ing] the IDR market." The
parties' relationship soon soured, and Kodak purported to
terminate the contract and purported to exit the IDR business.
ITyX brought suit against Kodak for breach of contract and to
enjoin Kodak from reentering the IDR business. After ITyX filed
this suit, and within two years of Kodak purporting to terminate
the agreement, Kodak partnered with a new IDR producer to market
and sell a new Kodak-branded IDR product.
- 3 - The jury verdict awarded $7,466,045 in damages to ITyX.
Kodak disputed that the verdict actually found that Kodak had
breached the contract. It argued that the jury must have
necessarily found that it was ITyX which breached, and that ITyX
had breached the covenant of good faith and fair dealing. The
district court correctly rejected this argument, as well as Kodak's
various "standing" and damages arguments. We reject all challenges
and affirm, except as to the calculation of prejudgment interest.
As to interest, we alter the date used and remand.
I.
We describe the factual background of the parties'
claims, and then turn to the procedural history of the appeal.
A. Factual Background
ITyX, a German software company, produces IDR software,
which interprets and extracts text from documents and then
organizes such content for a user. ITyX is wholly owned by ITyX
Technology, a German limited liability company. A German
partnership, ITyX OHG, owns the majority of ITyX Technology. ITyX
OHG is composed of partners Süleyman Arayan and Heiko Groftschik,
both citizens of Germany. Arayan is also the CEO of ITyX. Kodak
Alaris Holdings ("KAH") wholly owns Kodak, an American company.
1. The Master and PS Agreements
In 2011, ITyX began business discussions with Eastman
Kodak Company ("EKC") and, on January 18, 2012, entered into a
- 4 - contract called the "Master Agreement." Just a day later, EKC
filed for bankruptcy. In September 2013, Kodak assumed all of
EKC's rights and obligations under the Master Agreement.
The Master Agreement defines the parties' contractual
relationship. Its Preamble states that the parties "decided to
enter into a strategic partnership where ITyX [would] license [the
IDR software] to Kodak and Kodak [would] rebrand and market [such
software]." The Agreement defines the Kodak-branded, IDR product
(the "Kodak Product") as "the product, product family, and
components of products, . . . that Kodak intends to distribute to
End Users and will include or incorporate the Licensed Software
. . . supplied by ITyX and as developed pursuant to this
Agreement."
The Master Agreement had an initial term of five years,
and the parties believed that it would take about three years to
bring the software to market. Unless terminated, the Master
Agreement automatically renewed in two-year increments.
The Master Agreement provides that either Kodak or ITyX
could terminate the Master Agreement
after a material breach by the other Party upon written notice to the defaulting party ("Default Notice") specifying the default in reasonable detail, unless the defaulting party cures the default within 30 days after receipt of the Default Notice or, if such default cannot be cured within such time, the defaulting Party does not promptly start diligently and continuously in good faith to cure the default.
- 5 - ITyX warranted that it either owned the copyright of the IDR
software or "ha[d] and [would] retain the authority to enter into
. . . this Agreement and to grant licenses . . . to Kodak." The
Agreement also created various exclusivity obligations, including
that Kodak would be the sole distributor of the Kodak Product and
would not "develop a product functionally equivalent to the Kodak
Product," i.e., an IDR product that would compete with ITyX's
software. Although the Master Agreement authorized Kodak to exit
"in its sole good faith business judgment" the IDR business (and
so discontinue the marketing and sale of the Kodak Product), Kodak
could not sell an IDR product not supplied by ITyX within two years
of the exit date.
In the event of a breach, the Master Agreement allows,
but does not require, the non-breaching party to seek specific
performance from the breaching party.
The Master Agreement provided that ITyX would "act as an
independent contractor" of Kodak. The Master Agreement also
incorporates any "Statement[s] of Work" creating additional
"specifications and conditions" into which Kodak and ITyX would
enter subsequently. New York substantive law governs the
Agreement.
On June 25, 2015, Kodak and ITyX entered into another
contract, the Professional Services Transfer Pricing Agreement
("PS Agreement"). The parties then amended the PS Agreement on
- 6 - August 20, 2015 (the "PS Amendment"). Together, these "PS
Agreements" specified that Kodak would be solely responsible for
sales and marketing, and ITyX would provide the technology
necessary to deliver and support the software.
2. The Investment Framework Agreement Among Related Entities
More than two years after Kodak and ITyX entered into
the Master Agreement, a group of related entities, KAH, ITyX OHG,
ITyX Technology, and Arayan entered into a June 2014 Investment
Framework Agreement ("IFA"). Under the IFA, KAH would acquire
25.1% of ITyX Technology. ITyX Technology, in turn, was to acquire
ITyX and another company and KAH would invest €12.6 million into
ITyX Technology via a series of payments over a sixteen-month
period. The IFA also authorized ITyX Technology, once per quarter,
to request up to two million euros in additional investment funds
from KAH to "support . . . acquisitions or similar strategic
investments."
The IFA provides that if KAH failed to make a required
payment for more than thirty days, then ITyX OHG or ITyX Technology
could exercise a "call option." The call option, if exercised,
would allow ITyX OHG or ITyX Technology to purchase all ITyX
- 7 - Technology shares held by KAH in return for a payment of one euro
and a waiver of KAH's outstanding IFA obligations.
3. KAH Purports to Terminate the IFA and Kodak Purports to Terminate the Master Agreement
In June 2015, KAH did not make one of its required
payments at the required time. In response, on November 23 or 24,
2015, ITyX OHG gave notice to KAH that it was exercising the call
option. The notice stated that this decision was based on both
the missed payment and on an earlier refusal by KAH to invest
another two million euros into ITyX Technology pursuant the IFA.1
On December 18, 2015, KAH sent to ITyX OHG and ITyX
Technology a letter stating that it would not comply with the call
option, and that it was terminating the IFA for cause and was
withdrawing as a shareholder of ITyX Technology. Also on December
18, 2015, Kodak sent a letter to ITyX asserting that the exercise
of the call option effected a material breach of the Master
Agreement, and announced Kodak was terminating the Agreement. The
letter also stated that, if the termination was ineffective, Kodak
was abandoning the IDR business for a two-year period following
the exit date. A jury would later find that, by selling its
Actionable Intelligence Management ("AIM") platform, an IDR
1 Kodak contends that it missed the payment inadvertently and, immediately upon learning of this oversight, paid the required amount. The parties also dispute whether any such "strategic investment[]" existed. These issues do not affect the resolution of this appeal.
- 8 - software, Kodak reentered the IDR business in violation of that
two-year period.
B. Procedural History
On February 15, 2016, ITyX filed suit against Kodak for
damages for breach of contract and for declaratory and injunctive
relief to the effect that the Master Agreement was still in effect
and Kodak could not develop or sell products that competed with
the Kodak Product. ITyX moved for a preliminary injunction against
Kodak to prevent it from selling various IDR products. The
district court, finding no risk of irreparable harm, denied the
motion.
On April 15, 2016, Kodak moved to dismiss the action or
stay the proceedings until two related lawsuits in Germany were
resolved.2 The district court denied the motion, noting that it
was not certain that parties and/or contracts in the German
proceedings were "sufficiently aligned," or that the legal issue
were sufficiently alike.
On February 21, 2018, Kodak moved for summary judgment
on all claims, arguing primarily that ITyX lacked standing to bring
2 ITyX represented to the district court that, on March 20, 2018, the District Court of Frankfurt am Main dismissed the German lawsuit. Noting an ongoing appeal of that dismissal, the district court did not treat the German decision as final.
- 9 - the suit.3 Kodak also argued that, in terminating the Master
Agreement on December 18, 2015, it had validly terminated the PS
Agreements. It argued in the alternative that the purported
termination of the Master Agreement started a twelve-month
notification period required to terminate PS Agreements. The
district court reasoned that, because the PS Agreement provided
for a minimum duration of twenty-four months and did not expressly
premise its duration on that of the Master Agreement, that the
plain language of the PS Agreement did not support Kodak's argument
and denied summary judgment.
The parties then went to trial on November 5, 2018, and,
on November 26, 2018, the jury reached a verdict in ITyX's favor.
The jury made the following findings in response to special
questions as to ITyX's breach of contract claims: (1) The "Master
Agreement [was] a valid contract between [Kodak] and [ITyX]"; and
(2) Kodak did not "breach the Master Agreement and/or PS Agreements
by terminating them on December 18, 2015." On the other hand, the
jury found against Kodak that: (3) Kodak under the Master
Agreement "reenter[ed] the IDR business represented by the Kodak
3 Kodak also moved for partial summary judgment on various issues and ITyX moved for both judgment on the pleadings and partial summary judgment. The district court granted summary judgment on one minor, undisputed issue and denied summary judgment and judgment on the pleadings as to the remaining issues. For brevity, we elaborate on only the summary judgment issues relevant to the instant appeal.
- 10 - IDR Product within two years of abandoning that business on
December 18, 2015";4 (4) Kodak "breach[ed] the PS Agreements by
not making quarterly payments due during the minimum term of those
agreements from January 1, 2016 through at least June 1, 2017";
(5) Kodak's "breach of its contractual obligations [was not]
excused"; and (6) ITyX had "been damaged as a result of [Kodak's]
breach of its contractual obligations" and that $7,466,045 would
"fairly compensate ITyX . . . for its damages for [Kodak's] breach
of its contractual obligations." The parties agree that this sum
in the verdict was the result of the addition of $872,529 in
damages for the breach of the Master Agreement and $6,593,516 in
damages for missed payments under the PS Agreements.
As to Kodak's breach of contract counterclaim, the jury
found that ITyX did not "breach the Master Agreement, the PS
Agreements, and/or the Statements of Work by failing to comply
with the terms of those agreements." The jury also found that no
fiduciary relationship existed between Kodak and ITyX. The jury
rejected both of Kodak's tortious interference claims and awarded
no damages to Kodak on any of its claims.
4 Because of the agreed-on verdict form, the jury did not answer whether this violation of an explicit term of the Master Agreement was a breach, but the district court found this violation was a breach, ITyX Solutions, AG v. Kodak Alaris Inc., No. 16-cv- 10250-ADB, 2019 WL 1005497, at *4-5 (Mar. 1, 2019), and that finding is supported by the sum of the jury's award, which included sums for this breach.
- 11 - On March 1, 2019, the district court ruled on the
parties' claims for declaratory judgment and an injunction
preventing Kodak from reentering the IDR business. The court
issued declaratory judgments that Kodak did not properly terminate
the Master or PS Agreements on December 18, 2015, and Kodak
materially breached the Master Agreement's Exit Provision by
reentering the IDR business by marketing the AIM platform. Finding
that, following Kodak's breach, ITyX elected to terminate the
Agreements and seek damages, the court held that the Agreements no
longer bound both parties. Accordingly, the court denied the claim
for injunctive relief as moot. On the same day, the district court
entered final judgment in favor of ITyX. In its judgment, the
court awarded $1,745,654.20 in prejudgment interest and post-
judgment interest at the rate of 2.55% on the total damages award.
On March 25, 2018, Kodak moved for judgment as a matter
of law, or a new trial and/or amendment to the district court's
March 1 order. Kodak raised what it called its standing argument
from its summary judgment motion. As to its motion for judgment
as a matter of law, Kodak also argued that Kodak did not breach
any contract, ITyX breached the covenant of good faith and fair
dealing, and that the jury verdict supports this. As a fallback
argument, Kodak argued that the evidence was insufficient to
support the jury verdict that ITyX proved its claims of breach or
of the amount of damages. Turning to its motion for a new trial
- 12 - on the merits (or, in the alternative, on damages), Kodak presented
the same arguments outlined above as well as arguments that the
verdict form confused the jurors and ITyX's counsel committed trial
misconduct. The district court rejected Kodak's arguments and
denied the motion. This appeal followed.
II.
We review questions of law, including the issue of
standing, de novo. Katz v. Pershing, LLC, 672 F.3d 64, 70 (1st
Cir. 2012) (quoting Me. People's All. & Nat. Res. Def. Council v.
Mallinckrodt, Inc., 471 F.3d 277, 283 (1st Cir. 2006)). A denial
of judgment as a matter of law is also reviewed de novo, but
applying the same standard as the district court. That is, we
examine all evidence "in the light most favorable to the nonmoving
party, drawing all possible inferences in its favor. . . . We do
not consider the credibility of witnesses, resolve conflicts in
testimony, or evaluate the weight of the evidence." CPC Int'l,
Inc. v. Northbrook Excess & Surplus Ins. Co., 144 F.3d 35, 42 (1st
Cir. 1998) (internal citations omitted). We do not disturb the
jury verdict if, "viewing the evidence in the light most favorable
to the verdict, a rational jury could find in favor of the party
who prevailed." Gillespie v. Sears, Roebuck & Co., 386 F.3d 21,
25 (1st Cir. 2004). The determination under state law of
prejudgment interest is also reviewed de novo. See Tobin v.
Liberty Mut. Ins. Co., 553 F.3d 121, 145–46 (1st Cir. 2009) (citing
- 13 - R.I. Charities Tr. v. Engelhard Corp., 267 F.3d 3, 5 (1st Cir.
2001)).
The denials of the motion for a new trial and to amend
findings and/or the judgment are reviewed for abuse of discretion.
Cantellops v. Alvaro-Chapel, 234 F.3d 741, 744 (1st Cir. 2000);
Nat'l Metal Finishing Co. v. BarclaysAmerican/Commercial, Inc.,
899 F.2d 119, 125 (1st Cir. 1990).
A. Kodak's Attacks on District Court Rulings
1. Kodak's Argument that ITyX Lacked Standing to Bring the Suit Is Meritless
Kodak argues that ITyX does not have Article III
standing, and so the district court erred by not granting summary
judgment or judgment as a matter of law in Kodak's favor, and erred
by deferring its decision on standing until after the jury decided
material, disputed facts about the meaning of the contract. Kodak
argues that ITyX did not own or have the distribution rights to
the IDR software and so could not grant a license to Kodak, as
required by the Warranty of Title section in the Master Agreement.
In consequence, Kodak contends, ITyX could not enforce the Master
Agreement and so, in its view, it follows that ITyX lacked
standing. Kodak is wrong for several reasons.
Standing requires that a plaintiff satisfy "three
elements: injury in fact, traceability, and redressability."
- 14 - Kerin v. Titeflex Corp., 770 F.3d 978, 981 (1st Cir. 2014) (citing
Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992)).
ITyX's complaint alleged the existence of contracts to
which it was a party, and a concomitant breach, and damages. ITyX
was a party to the contract. That Kodak defends, on the grounds
that it believed ITyX breached the Warranty provision and that the
contract did not afford ITyX a right to enforce it, does not create
an issue of Article III standing. Kodak does not cite any cases
that a defense that a party to a contract has violated a provision
of that contract precludes Article III standing.
The only standing cases Kodak cites involve very
different facts, in which non-parties sought to sue on contracts
as third-party beneficiaries. See Miree v. DeKalb Cty., 433 U.S
25, 29 (1977) ("The relevant inquiry is a narrow one: whether
petitioners as third-party beneficiaries of the contracts have
standing to sue respondent."); AT&T Mobility, LLC v. Nat'l Ass'n
for Stock Car Auto Racing, Inc., 494 F.3d 1356, 1359–61 (11th Cir.
2007) (deciding whether a "non-party" had suffered an injury in
fact by looking to whether it had a "legally protected interest"
that was invaded). ITyX is not a non-party.
Traceability requires "'a causal connection' . . .
between the injury and the challenged conduct." Belsito Commc'ns,
Inc. v. Decker, 845 F.3d 13, 21 (1st Cir. 2016) (quoting Lujan,
504 U.S. at 560–61)). Here, the evidence adequately supported
- 15 - ITyX's allegation that Kodak discontinued contractual payments and
reentered the IDR market which caused ITyX financial injury.
Redressability requires "that the injury will likely be redressed
by a favorable decision." Id. (alteration and quotation marks
omitted) (quoting Lujan, 504 U.S. at 560–61)). Money damages
redress the economic injury ITyX alleged, and so this prong is
met. See 24 Richard A. Lord, Williston on Contracts § 64:1 (4th
ed. 2019) ("The primary if not the only remedy for injuries caused
by the nonperformance of most contracts is an action for damages
for the breach . . . ."). ITyX plainly had Article III standing
to bring this suit.
2. We Reject Kodak's Appellate Arguments About the PS Agreements' Minimum Duration
Kodak argues that the district court also erred in
holding "that the PS Agreements remained in effect for two years
after inception," that is, until at least June 1, 2017. This
argument is both waived and meritless.
In its Rule 50(a) motion, Kodak did not object to the
district court's summary judgment conclusion that the PS
Agreements had a minimum term of twenty-four months. Kodak has
waived this argument. At most, Kodak made the different argument
that ITyX could not show damages and no damages existed. That
different argument concerned the sufficiency of evidence of
damages, not the district court's interpretation of the PS
- 16 - Agreement. See Ji v. Bose Corp., 626 F.3d 116, 127-28 (1st Cir.
2010).
Even assuming dubitante that Kodak preserved this
argument, the argument still fails. The PS Agreements remained in
effect until at least June 1, 2017. The PS Agreements state that
"[t]he [PS] [A]greement has a minimum term of 24 months and is
automatically renewable for another year unless a cancellation
notice is given." The cancellation language on which Kodak's
argument turns does not alter the contracts' plain language as to
the minimum term.
B. Kodak's Attacks on the Jury Verdict and Denial of Judgment as a Matter of Law
To prove a breach of contract claim under New York law,
a party must show: "[1] formation of a contract, [2] performance
by one party, [3] failure to perform by another, and [4] resulting
damage." N.Y. State Workers' Comp. Bd. v. SGRisk, LLC, 983
N.Y.S.2d 642, 648 (App. Div. 2014). Kodak contends that ITyX did
not sufficiently show breach under either the Master or PS
Agreements and that the jury verdict is inconsistent.
1. Kodak Misunderstands the Jury's Findings of Breach of Contract as to the Master Agreement
Kodak argues that the district court erred in denying
its motion for judgment as a matter of law because Kodak reads the
jury finding that Kodak did not breach "by terminating [the Master
- 17 - and/or PS Agreements] on December 18, 2015" to mean that Kodak
validly terminated the Agreements in December 2015.5
First, this argument is forfeited, as Kodak "did not
raise a claim of inconsistency before the [district] court
discharged the jury." Correia v. Fitzgerald, 354 F.3d 47, 56–57
(1st Cir. 2003).
Second, Kodak's argument, even if preserved, reads too
much into this finding. This jury finding non-breach in this
respect does not contradict the jury finding that Kodak breached
by a different action and/or on some other date. The jury found
that Kodak had reentered the IDR business within two years of
purporting to abandon the business and that Kodak had breached the
PS Agreements. Such reentry is a different breach of the Master
Agreement. The jury then awarded damages to ITyX (and no damages
to Kodak). "Where there is a view of the case that makes the
jury's answers to special interrogatories consistent, they must be
resolved that way." Atlantic & Gulf Stevedores, Inc. v. Ellerman
Lines, Ltd., 369 U.S. 355, 364 (1962). Here, that view is that
Kodak, through reentry within two years, breached the Master
Agreement, Kodak breached the PS Agreements, and ITyX did not
breach the terms of these Agreements, including the implied
5 We do not address Kodak's arguments that are premised on the notion that the jury found it had breached the Master Agreement by terminating the contract. The jury found that Kodak did not so breach the Master Agreement.
- 18 - covenant of good faith and fair dealing. The jury's findings are
internally consistent, and sufficient evidence supports its
finding that Kodak breached the Master Agreement and PS Agreements,
but did not do so by purporting to terminate the Agreements on
December 18, 2015.
Next, Kodak argues both that the damages awarded were
"speculative and lacked evidentiary support." Both arguments lack
merit.
As to its "speculative" damages argument, Kodak asserts
that ITyX improperly calculated damages by factoring in the sales
figures of products they argue were irrelevant, and the jury
impermissibly relied on these product calculations. ITyX
presented evidence of its calculation of its damages under the
Master Agreement as forty percent of Kodak's AIM Platform sales.
The evidence was that the AIM Platform sales were a reasonable
proxy for the sales the Kodak Product would have accrued but for
Kodak's breach, of which forty percent belonged to ITyX under the
Master Agreement. Kodak's argument takes two forms: (1) that the
jury could rely only on figures related to the Kodak Product's
sales; and (2) that the AIM Platform figures include the sales of
products the district court had held not to compete with the Kodak
Product.
Kodak's first argument, that the jury could not rely on
the sales figures of the AIM platform, misreads the applicable
- 19 - law. Kodak relies on the rule that "[d]amages awarded for a breach
of contract must be 'specific to those goods for which the parties
had contracted.'" Mongiello's Italian Cheese Specialties, Inc. v.
Euro Foods Inc., No. 14-cv-2902 (DF), 2018 WL 4278284, at *46
(S.D.N.Y. Mar. 30, 2018) (quoting David v. Glemby Co., 717 F. Supp.
162, 170 (S.D.N.Y. 1989)). Because the jury awarded damages for
the Kodak Product revenues ITyX lost as a result of the breach,
and not for some other ITyX product, the award complied with the
rule.
Next, Kodak argues that the AIM Platform sales figures
comprised revenues from products that would not compete with the
Kodak Product and that the AIM Platform was not analogous to the
Kodak Product because it was sold to "different customers, in a
different market, in a different geographic area, and under a
different price structure." Nothing compelled the jury to accept
this view or to reach a different damages sum.
Under New York law, "the non-breaching party need only
provide a 'stable foundation for a reasonable estimate [of
damages]' before an award of general damages can be made."
Tractebel Energy Mktg., Inc. v. AEP Power Mktg., Inc., 487 F.3d
89, 110–11 (2d Cir. 2007) (alteration in original) (quoting Freund
v. Wash. Square Press, Inc., 314 N.E.2d 419, 421 (N.Y. 1974)).
Here, ITyX did just that by providing the sales figures of the
product that Kodak marketed in place of ITyX's. That Kodak can
- 20 - point to factors which tend to show that the estimate was too high
(just as ITyX can point to factors suggesting it was too low) does
not violate New York's "stable foundation" rule. Under New York
law, only the existence, not the amount, of general damages must
be "reasonably certain" to prove a breach of contract claim. Id.
at 110 (quoting Wakeman v. Wheeler & Wilson Mfg. Co., 4 N.E. 264,
266 (N.Y. 1886)).
2. Kodak's Attack Fails as to the Jury's Finding of Breach of Contract as to the PS Agreements
Kodak first argues that, following Kodak's December 2015
purported termination, ITyX failed to perform its contractual
obligations under the PS Agreements and so could not prove it had
met the performance element. Specifically, Kodak contends that
ITyX stopped identifying which employees provided services related
to the Kodak Product, issuing relevant invoices, and refunding
from each invoice the amount allocated to employees on Kodak's
payroll. These actions, Kodak argues, were conditions precedent
to Kodak making quarterly payments under the PS Agreements. In
response, ITyX argues the PS Agreement obliged it to maintain
capacity and, by doing so, ITyX performed. This was a matter for
the jury to resolve.
The jury heard testimony and saw evidence supporting
both Kodak's and ITyX's arguments as to such performance and the
alleged breach of the PS Agreements. The jury expressly found
- 21 - that Kodak breached the PS Agreements by not making these payments
and that ITyX had not breached the PS Agreements. The jury had an
adequate evidentiary basis for its verdict and its verdict was
rational.6
Kodak next argues that ITyX failed to prove damages
incurred by any alleged breach of the PS Agreement. This too was
an issue for the jury, and its conclusion is both supported and
rational. ITyX provided witness testimony about the manner of
calculating its costs of maintaining capacity under the PS
Agreements, and explaining the PS Agreements, which provide a table
of the quarterly payments Kodak was obligated to make. Kodak's
argument fails.7
6 While we have addressed Kodak's argument on the merits, Kodak seems to have waived this performance argument by not raising it in its Rule 50(a) motion. Kodak argued that, because "there[] [was] no list of the people who were on the ITyX Solutions payroll who [were] doing any work[,] . . . [ITyX] [could not] prove damages." This preserves Kodak's argument as to the damages element, but not as to the performance element, i.e., ITyX's purported non-performance of the PS Agreements.
7 Employing the same arguments, Kodak appeals the district court's denial of Kodak's motion to amend the district court's declaratory judgments to hold that the Master Agreement was terminated on December 18, 2015, and so Kodak did not breach any contract. The declaratory judgments are consistent with, and nearly identical to, the jury verdict. The district court clearly did not abuse its discretion.
- 22 - 3. Prejudgment Interest on the Damages Under the Master Agreement Should Be Computed from January 1, 2017
The district court calculated a prejudgment interest
award of $1,745,654.20 at the New York prescribed rate of nine
percent. See N.Y. C.P.L.R. § 5004; see also Analysis Grp., Inc.
v. Cent. Fla. Invs., Inc., 629 F.3d 18, 24 (1st Cir. 2010) (stating
that substantive state law governs the prejudgment interest award
in diversity actions). The district court calculated the
prejudgment interest on the $872,529 in damages awarded for breach
of the Master Agreement from the date the complaint was filed.8
Kodak appeals only the date used for computation of damages under
the Master Agreement.
Under New York Law,
[t]he date from which interest is to be computed shall be specified in the verdict, report or decision. If a jury is discharged without specifying the date, the court upon motion shall fix the date, except that where the date is certain and not in dispute, the date may be fixed by the clerk of the court upon affidavit. The amount of interest shall be computed by the clerk of the court, to the date the verdict was rendered or the report or decision was made, and included in the total sum awarded.
N.Y. C.P.L.R. § 5001(c). Because the jury did not fix the date,
the district court was thus authorized on motion to fix the date.
Id. The parties offered two potential dates: Kodak argued for
8 The district court calculated the prejudgment interest on the separate breach of the PS Agreement from the date each missed payment was due.
- 23 - January 1, 2017, the beginning of the first year of AIM Platform
sales. ITyX argued for the date of the filing of the complaint,
February 15, 2016. The district court chose the earlier date of
filing, but gave no statement of reasons.
Under New York law, the date chosen depends on there
being both a breach and damages. See N.Y. C.P.L.R. § 5001(b)
("Interest shall be computed from the earliest ascertainable date
the cause of action existed, except that interest upon damages
incurred thereafter shall be computed from the date incurred.");
N.Y. State Workers' Comp. Bd., 983 N.Y.S.2d at 648 (discussing
the elements for contract breach cause of action); see also Gelco
Builders & Burjay Contr. Corp. v. Simpson Factors Corp., 301
N.Y.S.2d 728, 730-31 (Sup. Ct. 1969) (requiring proof of damages
on the date from which prejudgment interest runs). The jury
verdict here, for breach of the Master Agreement, awarded damages
equivalent to the licensing fees owed for the breach. Kodak argues
that, because such damages were for license fees, the proper date
for the running of interest is January 1, 2017, as Kodak did not
make any new sales for which it would have owed fees before this
date. We think Kodak's position is the correct one under New York
law, for the reasons stated above.9
9 Kodak did not argue that the damages occurred at various times and so should be computed "from a single reasonable intermediate date." N.Y. C.P.L.R. § 5001(b).
- 24 - We vacate the award of prejudgment interest on the
$872,529 in damages under the Master Agreement, and remand with
instructions to calculate prejudgment interest from January 1,
2017.
C. The District Court Did Not Abuse Its Discretion in Denying Kodak's Motion for a New Trial
Kodak presents three arguments that the district court
abused its discretion in denying Kodak's motion for a new trial:
(1) the verdict was against the great weight of the evidence; (2)
the verdict form confused the jury; and (3) misconduct by ITyX's
trial counsel tainted the proceedings. We address each argument
in turn.
The verdict was most certainly not against the great
weight of the evidence, nor was the verdict an injustice to Kodak.
Although the district court has a much "broader" power to grant
new trial than judgment as a matter of law, it "'cannot displace
a jury's verdict merely because [it] disagrees with it' or because
'a contrary verdict may have been equally . . . supportable.'"
Jennings v. Jones, 587 F.3d 430, 436 (1st Cir. 2009) (second
alteration in original) (quoting Ahern v. Scholz, 85 F.3d 774, 780
(1st Cir. 1996)). A district court may "independently weigh the
evidence," but can only order a new trial when the verdict is
against the weight of the evidence or when a new trial is necessary
to prevent injustice. Id. Kodak here offers substantially the
- 25 - same arguments we have already rejected and so we cannot say there
was any abuse of discretion.
Next, Kodak argues that the verdict form confused the
jury, rehashing its argument that the jury must have been confused
because it found that Kodak did not breach the Master Agreement
but nonetheless assessed damages for that breach. At oral
argument, Kodak offered a new variation of its jury confusion
argument: that the district court and parties agreed that, if the
jury found that Kodak did not breach "by terminating [the Master
and/or PS Agreements] on December 18, 2015," then Kodak validly
terminated the Master Agreement on that date, so the Exit Provision
would no longer have any force.
We earlier rejected these inconsistency arguments as
forfeited under Correia, 354 F.3d at 56–57, and meritless under
Atlantic & Gulf Stevedores, Inc., 369 U.S. at 364, and do so again
here in response to the argument. Moreover, Kodak did not
sufficiently develop the latter jury confusion argument on appeal,
and so it is doubly waived.10 United States v. Zannino, 895 F.2d
1, 17 (1st Cir. 1990). To the extent this is a belated attack on
the verdict form or the jury instructions, the arguments are
10 In its appellate briefing, Kodak merely states its view that the parties and district court had agreed in a colloquy outside the presence of the jury that "an answer in the negative to Question 2 meant that the Master Agreement was validly terminated and the Exit Provision ceased to have effect."
- 26 - waived. Kodak objected to neither. See Kavanaugh v. Greenlee
Tool Co., 944 F.2d 7, 11 (1st Cir. 1991); Moore v. Murphy, 47 F.3d
8, 11 (1st Cir. 1995).
Finally, Kodak argues that purported misconduct by
ITyX's counsel "tainted the proceedings" and warrants a new trial.
The purported misconduct, as Kodak would have it, is that the
plaintiff's counsel made efforts to portray ITyX as David against
Kodak as Goliath. Counsel for ITyX referenced the relative sizes
of the parties on two occasions: (1) it elicited testimony on
Kodak's revenues; and (2) ITyX, in its closing, characterized Kodak
as a "large company taking advantage of a smaller company." Even
if these comments were inappropriate, and we do not say they were,
the court's instructions clearly offset any such suggestions,
stating:
You should consider and decide this case as a dispute between persons of equal standing in the community, of equal worth, and holding the same or similar stations in life. A corporation is entitled to [a] . . . fair trial . . . regardless of its absolute size or its size relative to any other party in the case.
And nothing in the jury's verdict leads even to a suspicion that
the jury ignored this instruction. See Río Mar Assocs., LP, SE v.
UHS of P.R., Inc., 522 F.3d 159, 163 (1st Cir. 2008) ("[J]urors
are presumed to follow the trial court's instructions.").
There was nothing unfair or inappropriate as to the
jury's verdict or the district court's rulings.
- 27 - III.
We affirm the rulings of the district court in all
respects except its award of prejudgment interest on damages under
the Master Agreement. As to that prejudgment interest award, we
vacate and remand with instructions to recalculate that interest
from the date of January 1, 2017. Costs are awarded to ITyX
Solutions AG.
- 28 -