T hi s or derand j udgm enti s notbi ndi ng pr ece dentexce ptundert he * doctr i nes of l aw of the ca s e, r es j udi cat a, and col l at er al es t oppel . I tm aybe ci t ed, h o w e v e r, fo r its p e rsu a siv e v a lu e c o n sis ten t w ith F e d . R . A p p . P . 3 2 .1 a n d 1 0 th C ir . R . 3 2 .1 . 

## F I LED United States C ourt of Appeals Tenth Circuit 

### A p r il26,2007 Elisab eth A. Shumaker C l erk of C ourt UNI TED S TATES CO URT O F AP PEALS

T E N T H C IR C U IT
KL E S CH & COMP ANY L I M I T E D,

P lai n ti ff-C o u n ter- D e fe n d a n t - A p p e llan t, N o. 05- 1206

v. ( D . C ol or ado) L I BE RT Y M E DI A C OR P OR AT I ON; J OHN C. M ALONE; ROBER T R. BEN NETT, D efen d an ts- C o u n ter- C l ai m ants - A pp el l ees. (D . C . N o . 0 1 -D -14 5 6 (C B S ))

ORDE R AND J UDGM EN T *
B efor e HA RTZ , O’ BRI EN , and M c CO NNELL , C i rcui tJudg es. C l ai m i ng t hat LibertyM edia C orp. exp ropri at ed a v al uab l e bu si ness oppor tuni t y , K l es ch & C om pany , L t d. , br oughta di ver s i t yact i on i n t he U ni t ed St at es D i s t r i ctC our tfort he D i s t r i ctof C ol or ado. K l es ch l os tatt r i al and now ap p ea ls, ch all en g ing the c o u rt ’s i n stru cti o n s (1) tha t th e juryco u ld n o t aw ard damages t o K l es ch undert he l as tof s ever al s ucce s s i ve w r i t t en agr eement s s i gned-2-

byK l es ch and Li ber t yM edi a; ( 2) t hatK l es ch’ s m i s appr opr i at i on cl ai m r equi r ed pr oof thatL i ber t yM edi a had pr ofi t ed fr om t he mi s appr opr i at i on; and ( 3) t hat L i bert yM edia w ou l d b e l i able for dam ages on l yi f i tw as a but- for cause of t ho se d a ma g e s . W e h a v e j u r i s d i c t i o n u n d e r2 8 U. S . C. § 1 2 9 1 a n d a ffi r m. I . BA CKGROUND A . T h e P a r tie s’ R e la tio n sh ip T he clai m s i n thi s case ar i se out of separat e, successi ve ag reem ents w ho se force t he p art i es di sputed att ri al . T he ag reem ents con cern t he p art i es’ pot ent i al acqu i si t i on of G erm an cab l e com pan i es. In 1 9 9 9 D e u tsc h e T e lek o m , w h ich o w n e d th e c a b le in f ra stru c tu re in G er m any , pl anned t o s pl i tr es pons i bi l i tyfort hi s i nfr as t ructur e among ni ne new r e g i o n a l c o mp a n i e s t o b e a u c t i o n e d t o t h i r d p a r t i e s . Kl e s c h , a p r i v a t e - e q u i t yfi r m, b o u g h t o n e re g io n a l c o m p a n yin A u g u s t 2 0 0 0 . E arl i er that y ear i thad al so a c q u i r e d t h e e x c l u s i v e r i g h tt o n e g o t i a t e fo rt wo o t h e rr e g i o n a l c o mpa n i e s . To s ol i ci tfunds t o i nves ti n t hes e compani es , K l es ch t ook s t eps t o for m C api t al C o m m u n icati o n s P artne rs (C C P ). I n O ct ober2000 K l es ch met w i t h L i ber t y , w hi ch hel d i nt er es t s i n var i ous com m un i cat i on s, i nternet, and video-program m i ng com pan i es, t o d i scuss i nves t i ng i n t he r egi onal compani es ; butL i ber t ydi d notcomm i tt o any i nves t m ent s att hatt i m e. D es pi t e s om e unce r t ai nt yaboutthe i nves t or s i tm i ghtbe a b l e t o l i n e u p , Kl e s c h b i d fo rt h e t wo r e g i o n a l c o mp a n i e s i n J a n u a r y2 0 0 1 . By-3-

th e n it h a d b e c o m e a w a re th a t T e lek o m m ig h t b e w ill in g to se ll all six y e t-u n so ld re g io n a l c o m p a n ie s to a s in g le b u y e r. T hi s pos s i bi l i t yappea r s t o have s par ked L ib e rty ’s in ter e st in th e d e a l. A t a m e e tin g in F e b ru a ry2 0 0 1 K les c h to ld L ib e rty th a t ite x p e c ted th a t a 5 5 % in ter e st in th e re m a in in g six re g io n a l co m p a n ies w o u ld be s uffi ci entt o exer ci s e contr ol of them. K l es ch and Li ber t ybegan di s cus s i ng t he a c q u isitio n o f

th e G e rm a n c o m p a n ies , an d th e ya g re e d to e x p lo re th e p o ss ib ili ty o f jo in tly a c q u ir in g a ll r e m a in in g c o m p a n ie s . O n February11 L i ber t ys entan emai l t o K l es ch t o t he effec tt hatt he law y e rs s h o u ld sta rt d ra f tin g a w ritten c o n tra c t. T w o d a y s la ter L ib e rtyse n t a l et t erpr opos i ng i t s i nvol vement i n C C P, des cr i bi ng ant i ci pat ed agr eement s , and condi t i oni ng futur e i nvol vement on s uch thi ngs as r egul at or yappr oval , fi nanci al due di l i gence , and Li ber t y ’ s futur e ac cept ance of “de fi ni t i ve document at i on. ” A p le e . S u p p . A p p . V o l. I V a t 1 1 6 8 . O n February16 K l es ch and Li ber t yent er ed i nt o a conf i dent i al i t yagr eement pr event i ng L i ber t yfort w o y ear s fr om us i ng K l es ch’ s pr i vat e i nfor m at i on t o s eek i t s ow n deal w i t h T el ekom for the s i x r emai ni ng r egi onal compani es . A s econd agr eementon February21 i m pos ed tw o obl i gat i ons t hr ough J une 30, 2001: ( 1) L i ber t ycoul d notcont actT el ekom w i t houtK l es ch’ s w r i t t en perm i s s i on; and ( 2) nei t herpar t ycoul d s eek w i t houtt he othera dea l conce r ni ng t he s i x r egi onal c o m p a n ies . In a d d iti o n , L ib e rtya g re e d to n o tifyK les c h if it d e c id e d n o t to-4-

pur s ue the s i x compani es t hr ough C C P, upon w hi ch not i fi cat i on t he agr eement w oul d t er m i nat e. T he part i es s i gned a l et t erof i nt entt he nextday , February22. T hatl et t er out l i ned the pr opos ed dea l , underw hi ch C C P w oul d acqui r e a 55% i nt er es ti n t he s i x r egi onal compani es and an opt i on t o acqui r e addi t i onal i nt er es t s . T he l et t er s t at ed thatt her e w as s t i l l no defi ni t i ve agr eementbetw een the part i es . K l es ch so o n b e g a n to sh a re w ith L ib e rtyc o n fid e n tial in fo rm a tio n re latin g to th e d e a l. O n M a rc h 1 6 th e p a rties sig n e d a d o c u m e n t (th e T e rm S h e e t) se tti n g fo rth th e ir“ u n d e rs ta n d in g o f th e b u s in e s s a rr a n g e m e n t.” A p lt. A p p . V o l. V I a t 1 7 0 5 . T hi s document s etfor t h t he bas i c t er m s of the pr opos ed dea l , i n w hi ch K l es ch and L i ber t yw oul d become equal par t ner s i n C C P, w hi ch w oul d be the gene r al par t ner of anotherent i t yfor m ed t o acqui r e the G er m an compani es . B utt he ac qui s i t i on w a s s til l p re m ise d o n th e c o n d iti o n th a t all its a sp e c ts “ w ill b e a c c e p tab le to b o th K l es ch and Li ber t y . ” Id. at1706. T h e first sig n s o f

tro u b le s e e m to h a v e c o m e sh o rtlyth e re a f ter . L ib e rty as s er t s t hati thad s i gned the Ter m Sheetbas ed on the as s um pt i on t hata 55% in ter e st w o u ld p ro v id e a d e q u a te c o n tro l o f th e re g io n a l co m p a n ies . T h ro u g h its ow n i nves t i gat i ons , how ever , i tfound thatt hi s w as nott he ca s e underG er m an l aw . L i ber t ycont ends t hatt he dea l w as notw or t hw hi l e w i t houta contr ol l i ng i nter estand t hat i thad determ i ned t hat i tw ou l d b e nece ssaryt o p urchase atl east 7 5 % o f th e e q u ityin ter e st in th e re g io n a l co m p a n ies fo r th e lev e l o f c o n tro l it-5-

s o u g h t. D ur i ng negot i at i ons on A pr i l 17 s uch a pur chas e appa r ent l yw as not a c c e p tab le to T e lek o m . B u t o n A p ril 2 5 T e lek o m a g re e d to se ll 7 5 % if L ib e rty agr eed t o a putt hatw oul d r equi r e i tt o buyt he r emai ni ng 25% att he s ame pr i ce upon T el ekom’s demand. K l es ch w as l at ert o ar gue thatL i ber t yunfai r l yacc ept ed t hi s pr opos al on i t s ow n, w i t houtcons ul t i ng K l es ch. C o n ten d in g th a t ith a d su b sta n tiallyin c re a se d its c o m m itm e n t an d risk in t he dea l , L i ber t ys oughtt o change i t s r el at i ons hi p w i t h K l es ch. K l es ch cons ent ed t o r evi s e thei ragr eementi n M ay2001. T o al l ayK l es ch’ s conce r n aboutr epea t ed r evi s i ons , L i ber t y ’ s pr es i dents t at ed thatno fur t herchange s i n t he dea l betw een L ib e rtya n d K les c h w e re a n ticip a ted a b se n t f u rth e r c h a n g e s in th e d e a l w ith T e le k o m . L at eri n M ayL i ber t y ’ s exec ut i ve comm i t t ee de ci ded thatt he dea l w as unfai rt o L i ber t y , gi ven thatL i ber t y ’ s comm i t m ent s had r i s en s ubs t ant i al l ybut K le s c h ’s h a d n o t. L ib e rt y ’s p re s id e n t n o tifie d K le s c h th a t “ n o tr a n s a c tio n . . . w o u ld b e a c c e p tab le [ to u s] w ith o u t a lo w e r le v e l o f g u a ra n tee d p a ym e n ts to y ou. ” A pl ee. Supp. A pp. V ol . I V at1179. It w ish e d to c h a ra c ter ize p a ym e n ts to K l es ch as a fi nder ’ s fee oras cons ul t i ng paym ent s , r athert han as paym ent s t o an equi t ypar t ner , and i ns i s t ed thatK l es ch w oul d “notpar t i ci pat e i n governance . ” Id. I n a l at erphone ca l l t he part i es appea rt o have be en unabl e t o r eac h an agr eement , and Li ber t yi ns i s t ed thati tcoul d notpr ocee d w i t h t he dea l on t he-6-

t er m s K l es ch demanded. W hen K l es ch s ugges t ed thati tm i ghtr ai s e furt herfunds to s u p p o rt th e tr a n s a c tio n , L ib e rt ya g re e d th a t th a t m ig h t b e a c c e p ta b le . B efor e thi s phone ca l l L i ber t yhad begun t o comm uni cat e w i t h T el ekom d ire c tly , p u tativ e lyfo r th e p u rp o se o f re tain in g T e lek o m ’s g o o d w ill a n d g iv in g it u p d a te d in fo rm a tio n . A t tr ia l L ib e rt y ’s in te n t in th e s e d is c u s s io n s w a s d is p u te d . L i ber t yand K l es ch cont i nued thei rnegot i at i ons , and on M ay17, 2001, Kl e s c h a p p e a r s t o h a v e a g r e e d i n p r i n c i p l e t o s u b s t a n t i a l l yc h a n g e d t e r ms . On M ay24 K l es ch’ s i nves t m entbankers entK l es ch a l et t ers ugges t i ng t hatt he val ue t o K l es ch of the M ar ch 16 t er m s and the new t er m s w er e compar abl e. K l es ch and L i ber t ynegot i at ed and s i gned a ne w agr eementon J une 7. O ne of the fi nal d is a g re e m e n ts b e fo re th e a g re e m e n t w a s s ig n e d w a s w h e th e r i t w a s to b e b in d in g . L i ber t yappea r s i ni t i al l yt o have w ant ed fl exi bi l i t yand nott o be bound byt he n e w a g re e m e n t; K les c h w a n ted th e a g re e m e n t to b e b in d in g a n d a d v ise d L ib e rty t hati tw oul d cons i dercour tact i on i f the part i es coul d notr eac h a bi ndi ng a g re e m e n t. T h e fin a l ag re e m e n t co n tain e d a p ro v isio n re q u irin g g o o d -fa ith negot i at i ons t o r eac h a def i ni t i ve agr eement ; i f thes e negot i at i ons di d notl ead t o a d e a l an d L ib e rtyw e re to p u rc h a se th e six T e lek o m re g io n a l co m p a n ies b yitse lf befor e J une 7, 2003, L i ber t ypr om i s ed t o payK l es ch 3% of the val ue of the acqui r ed as s et s , up t o 165 m i l l i on eur o. T he new agr eementexpl i ci t l ys uper s eded t he M ar ch 16 agr eement“i n i t s ent i r ety , ” A pl t . A pp. V ol . I V at1712, buti ts t at ed-7-

th a t n o th in g e lse in it w a s b in d in g e x c e p t th e p ro v isio n re q u irin g g o o d -fa ith n e g o tiatio n to re a c h a d e fin iti v e a g re e m e n t. T he negot i at i ons betw een K l es ch and Li ber t ycal l ed forbyt he J une 7 agr eement di d nots ucce ed. O n J une 21, 2001, L i ber t yagr eed w i t h T el ekom on t er m s byw hi ch i tw oul d acqui r e the s i x r egi onal compani es di r ect l yfr om T e lek o m . O n Ju ly2 4 L ib e rtyse n t a le tter to K les c h sta tin g th a t “L ib e rtyM e d ia is notnow , and has neverbeen, a part nerw i t h y ou ory ourcompany . ” A pl t . A pp. V ol . I at33. K l es ch fi l ed s ui ton J ul y27, 2001, cont endi ng t hatL i ber t yhad “ut t er l yfai l ed and r efus ed t o negot i at e w i t h K l es ch i n good fai t h” t ow ar d a fi nal a g re e m e n t. Id. at49. O n Sept ember 3, 2001, L i ber t yand Tel ekom si gned an a gr eementfor L i ber t yt o acqui r e the s i x r egi onal compani es . B utt he G er m an C ar t el O ffi ce quas hed the dea l on February28, 2002, and Li ber t yand Tel ekom abandoned the ac q u isi ti o n sh o rt lythere af ter. B . L i t i gat i on K lesch ’s c o m p lain t se t fo rth a n u m b e r o f c laim s u n d e r C o lo ra d o law : br eac h of contr act , pr om i s s or yes t oppel , br eac h of fi duci arydut y , fr aud, negl i gent m isre p re se n tatio n , m isa p p ro p ria tio n o f b u sin e ss v a lu e , tor tio u s in ter fe re n c e w ith economi c adva nt age, and unj us tenr i chment . T he gi s tof the compl ai ntw as t hat L ib e rtyp u rsu e d n e g o tiatio n s w ith T e lek o m in v io latio n o f its a g re e m e n ts w ith K l es ch and uni l at er al l ychange d t he t er m s of thos e agr eement s . K l es ch cl ai m ed-8-

th a t af ter u sin g K les c h ’s u n iq u e sk ill s a n d in fo rm a tio n re late d to th e d e a l, L ib e rty s ei zed the oppor tuni t yt o acqui r e the s i x r egi onal compani es fori t s el f, t her eby fr eez i ng K l es ch outof t he dea l and fa i l i ng t o t r eatK l es ch as an equa l par t ner d e s p ite p ri o r a g re e m e n ts a n d fid u c ia ry d u tie s . L iberty ’s fi r s tamended ans w erand count er cl ai m , dat ed O ct ober23, 2002, cont ended thatK l es ch’ s cl ai m s w er e barr ed byt he t er m s of the J une 7 agr eement and s oughta dec l ar at or yj udgm entt hatL i ber t yw as r el i eved of anydut i es under th e a g re e m e n t b e c a u se K les c h h a d b re a c h e d a n d re p u d iate d it. T h e c o u n ter c laim al s o s oughtdamages forfr aud and ne gl i gentm i s r epr es ent at i on bas ed on the al l egat i on t hatK l es ch fa l s el ys t at ed dur i ng t he negot i at i ons fort he J une 7 agr eementt hati ti nt ended t o honori t s obl i gat i on u n d e r th a t ag re e m e n t to negot i at e i n good fai t h. T he j ur yr ej ect ed K l es ch’ s cl ai m s of br eac h of fi duci arydut y , fr aud, negl i gentm i s r epr es ent at i on, t or t i ous i nt er fer ence w i t h economi c adva nt age, and m i s appr opr i at i on. I tfound i n favorof K l es ch on i t s cl ai m s t hatL i ber t ybr eac hed its c o n tra c t b yc o n tac tin g T e lek o m b e fo re Ju n e 3 0 , 2 0 0 1 , an d b yn e g o tiatin g w ith T el ekom t ow ar d t he ac qui s i t i on of the s i x r egi onal compani es ; buti tacc ept ed L iberty ’s affirm ati v e d efen ses o f e stop p el, im p o ssibil ityan d fru str ati o n , w aive r, and ac cor d and s at i s fac t i on w i t h r es pectt o t hes e cl ai m s . T he di s t r i ctcour tl at er rejec ted K les c h ’s e q u itab le c laim s fo r p ro m iss o rye sto p p e l an d u nju st e n ric h m e n t. II. A N A L Y S IS-9-

K l es ch’ s appea l r es t s on chal l enges t o t hr ee j ur yi ns t ruct i ons : ( 1) an i ns t ruct i on t hatt he j ur ycoul d notaw ar d damages t o K l es ch undert he J une 7 a g re e m e n t, ( 2 ) a m is a p p ro p ri a tio n in s tru c tio n , a n d (3 ) a c a u s a tio n in s tru c tio n . A . Ex c l udi ng Dam ag e s U nde r t he June 7 Agre e m e nt K l es ch’ s fi r s tchal l enge i s t o t he di s t r i ctcour t ’ s i ns t ruct i on t o t he j ur yt hat K l es ch “c annotr ecove rdamages undert he J une 7, 2001 agr eement . ” A pl t . A pp. V ol . V at1600. T hi s i ns t ruct i on fol l ow ed fr om t he court ’ s rul i ng on a mot i on L i ber t ypr es ent ed underFed. R . C i v. P. 50 aft ert he cl os e of e vi dence t o pr ecl ude K l es ch fr om r ecove r i ng s uch damages . T he courtgr ant ed the mot i on on t hr ee gr ounds : ( 1) t hatK l es ch had notpl eade d a cl ai m fordamages undert he J une 7 agr eementi n ei theri t s compl ai ntort he pr etr i al or der ; ( 2) t hatK l es ch had pr es ent ed no evi dence t hati thad s uffe r ed damages fr om br eac h of the J une 7 agr eement ; and ( 3) t hatK l es ch coul d notbot h ar gue thatt he J une 7 agr eement w as i nval i d and s eek da m ages undert hats ame agr eement . W e nee d notcons i der th e latte r tw o g ro u n d s b e c a u se w e a ffirm o n th e f irst. W e n o te a t th e o u tse t th a t K les c h m a d e n o m o tio n a t trial to a m e n d its compl ai ntort he pr etr i al or der . I t s cont ent i on i s s i m pl ythatt he exi s t i ng pr etr i al or derper m i t t ed i tt o cl ai m damages underthe J une 7 agr eement . W e r evi ew t he d is tr ic t c o u rt ’s in te rp re ta tio n o f th e p re tr ia l o rd e r fo r a b u s e o f d is c re tio n . See Koch v. Koch Indus
. , Inc. , 2 0 3 F . 3 d 1 2 0 2 , 1 2 1 9 (10 th C ir . 2 0 0 0 ) (“T h is co u rt r evi ew s forabus e of di s cr et i on a di s t r i ctcour t ’ s excl us i on of evi dence ori s s ues-10-

f ro m trial o n th e b a sis o f a p ro p e rly -d ra w n , d e taile d p re trial o rd e r.”) ; T y lerv . C ity of Manhat t an , 1 1 8 F .3 d 1 4 0 0 , 1 4 0 3 (1 0 th C ir. 1 9 9 7 ) (“ [ T ]h e d istric t co u rt is in th e b e s t p o s itio n to in te rp re t its p re tr ia l o rd e r.” ). W e hol d t hatt he di s t r i ctcour tact ed w el l w i t hi n i t s di s cr et i on i n rul i ng t hat t he pr etr i al or derdi d noti ncl ude anycl ai m byK l es ch fordamages undert he J une 7 agr eement . I ndeed, K l es ch’ s cons i s t entpos i t i on had bee n t hatt he agr eementw as unenfor cea bl e. T he s ol e ment i on i n t he compl ai ntof the J une 7 agr eementi s i n t he fol l ow i ng par agr aph: In th e e v e n in g o f

Ju n e 7 , 2 0 0 1 , af

ter c o n sid e ra b le b u t f u til e e ffo rts to co n v ince L ibertyM ed ia t o ac t i n g o o d fa ith an d to h o n o r i ts fidu ciary obl i gat i ons , [K l es ch] s i gned a “ non- bi ndi ng” t er m s heetw hi ch s et for t h t he t er m s di ct at ed byL i ber t yM edi a ( t he “J une 7 Ter m Sheet ”) in a n e ffo rt to a v o id lo sin g a ll o f th e b e n e fits o f

th e p a rtn e rsh ip oppor tuni t yK l es ch had de vot ed s o m uch effor tt o acqui r i ng. T he Ju n e 7 T e rm S h e e t, w h ich K les c h sig n e d u n d e r th re a ts f ro m L ib e rty M edi a, pr ovi ded thatL i ber t yM edi a w oul d negot i at e i n good fai t h t he t er m s of a f

i nal agr eementbetw een K l es ch and Li ber t yM edi a and, fai l i ng s uch agr eement , w oul d payK l es ch, upon cons um m at i on of the S ix R e g io n s a c q u is itio n , a n a m o u n t fa r l e s s th a n its ri g h tf u l s h a re . L i ber t yM edi a has ut t er l yfai l ed and r efus ed t o negot i at e w i t h K l es ch i n good fai t h. A p lt. A p p . V o l. I at 4 8

– 4 9 . T o b e su re , the fin a l se n ten c e m ig h t b e re a d to s ugges tt hatK l es ch i s cl ai m i ng damages forbr eac h of the J une 7 agr eement ; but t he for ce of

t he par agr aph i s t o under m i ne the agr eementbyas s ert i ng t hat K l esch’s con sentt o itw as coerced. T his asser t i on anti ci pated L i bert y ’s defe nse t hat the Jun e 7 ag reem ent fr eed itfrom ob l i gati on s und er pr eceding ag reem ents .-11-

I ndeed, K l es ch’ s r epl yt o L i ber t y ’ s count er cl ai m deni ed Li ber t y ’ s al l egat i on t hat

“ th e Ju n e 7 L e tter A g re e m e n t is a v a lid a n d e n fo rc e a b le c o n tra c t b e tw e e n L ib e rty M edi a and K l es ch & C om pany , and i s bi ndi ng i n acc or dance w i t h i t s t er m s , ” i d. at82, and i t s ni nt h aff i r m at i ve defens e w as , “Li ber t yM edi a fr audul ent l yi nduced K l es ch t o s i gn t he J une 7 Ter m Sheet , ” i d. at94. I n anyevent , t he compl ai ntw as s uper s eded byt he pr etr i al or der . “[T] he pr etr i al or deri s t he contr ol l i ng document att r i al . ” Sm i th v. A z t ec Wel lSer vi ci ng C o. , 4 6 2 F .3 d 1 2 7 4 , 1 2 8 5 (1 0 th C ir. 2 0 0 6 ); s ee Fed. R . C i v. P. 16( e) . A nd t he pr etr i al or dercert ai nl yi ncl udes no cl ai m fordamages under t he J une 7 agr eement . I n a s ect i on ent i t l ed “Pl ai nt i ff K l es ch’ s St at ement of C l ai m s and D e fe n se s,” th e o rd e r sta tes th a t K les c h c laim s th a t it s a g re e m e n t w ith L ib e rty e n tit led it t o p a rticip a te a s a n “ e q u a l p a rtn e r” ra th e r th a n “ m e re lya n in v e sto r” in t he ac qui s i t i on of the G er m an compani es . A pl t . A pp. V ol . I at98. I tt hen charact eri zes t he p artnershi p as fo l l ow s: T he part ner s hi p and i t s t er m s ar e evi dence d i n the conduc tof the par t i es and i n num er ous com m uni cat i ons and agr eem ents betw een K l es ch and Li ber t

y Medi a dur i ng the w i nt erand ear l y s pr i ng of 2001 , i ncl udi ng, butnotl i m i t ed t o a February11, 2001 emai l fr om L ibertyM ed ia pre side n t R o b ert B en n ettto M r. K lesch , a F eb rua ry 2 1 , 2 0 0 1 c o n fid e n tialitya g re e m e n t b e tw e e n K les c h a n d L ib e rty M edi a, a February22, 2001 l et t erof i nt ent( “LO I ”) among K l es ch, L i ber t yM edi a and Tel ekom, and a M ar ch 16 l et t eragr eementand t er m s heetbetw een K l es ch and Li ber t yM edi a. Id. (e m p h a s is a d d e d ). T he l i s tof “c om m uni cat i ons and agr eement s ” does not i n c l u d e t h e J u n e 7 a g r e e me n t ; a n d J u n e 7 , 2 0 0 1 , i s we l l o u t s i d e t h e s t a t e d t i me-12-

p e rio d : “ t he w i nt erand ea r l ys pr i ng of 2001. ” Id . N ori s t her e anym ent i on el s ew her e i n t hi s s ect i on of a pos s i bl e cl ai m byK l es ch fordamages under t he J une 7 agr eement . O n t he contr ary , t he s ol e ment i on of thatagr eementi s i n t he penul t i m at e s ent ence , w hi ch s t at es : “The June 7 t er m s heetw as t he pr oductof L ib e rtyM e d ia’ s f

ra u d u len t an d fid u c iar ym isc o n d u c t an d th e re fo re L ib e rtyM e d ia has no r i ghtt o r ecove ranyamount s w i t h r es pectt o t hatm i s conduct . ” Id. at102. A s t he di s t r i ctcour tobs er ved i n s uppor tof i t s rul i ng, “[I ] f K l es ch w as t aki ng t he pos i t i on t hats om ehow i tr es er ved the r i ghtt o s eek da m ages undert he J une 7 agr eement , i tw oul d have t o s om ehow aff i r m at i vel ys ayt hati n t he fi nal pr etr i al or derbeca us e i n ot herpor t i ons , i t ’ s s ay i ng t hatt he J une 7 agr eementi n effectw as ent er ed underdur es s . ” A pl t . A pp. V ol . V at1583. O nl yaft ert he di s t r i ctcour tas ked fors uppl ement al br i efi ng on S eptem ber 8, 20 05 , abo ut tw o w eeks i nto the fo ur- w eek tr i al , did K l esch sug gest th a t itm ig h t h a v e a c laim u n d e r th e Ju n e 7 a g re e m e n t. T h e c o u rt h a d a p p a re n tly r eques t ed “a m emora ndum and j ur yi ns t ruct i ons cl ar i fy i ng t he part i es ’ pos i t i ons on ( I ) t he J une 7 Let t erA gr eementas a defens e for[Li ber t y ] . . . and ( i i ) t he i nt er act i on of [K l es ch’ s ] defe ns es t o t he J une 7 Let t erA gr eement . ” A pl ee. Supp. A pp. V ol . I at84–85 ( D ef. ’ s Supp. M em. C oncerni ng the J une 7 Let t erA gr eement as a D efen se, S ept. 13 , 20 04 ). B oth L i bert yand K l esch respond ed to t his request on Sept ember 10. K l es ch’ s m emora ndum r ei t er at ed i t s pos i t i on t hatt he evi dence w oul d “perm i ta j ur yt o concl ude thatdefe ndant s ar e w r ong t hatt he J une 7 l et t er-13-

agr eementi s a defens e t o anypar tof K l es ch’ s cl ai m s . ” Id. at80 . B ut i tal so cont ai ned a pa r agr aph s ugges t i ng t hatt he j ur ycoul d concl ude thatt he J une 7 ag ree m en t w as b ind ing an d co n tai n ed o b li g ati o n s u p o n L ibertythat “p rov ide[ d ] a bas i s forr ecove r yforK l es ch. ” Id. at81. L i ber t ypr om pt l yfi l ed a mem or andum oppos i ng s uch a c l ai m forr ecove r y , s et t i ng for t h t he thr ee gr ounds upon w hi ch t he di s t r i ctcour tl at err el i ed i n gr ant i ng L i ber t y ’ s R ul e 50 mot i on t o r ej ectt he c la im . St r angel y , even i n cl os i ng ar gum entt o t he j ur y , K l es ch di d notcl ai m t hat it w a s e n tit led to d a m a g e s u n d e r th e Ju n e 7 a g re e m e n t. T h u s, it is u n d e rsta n d a b le t hatw hen Li ber t ym oved underR ul e 50 t o pr ecl ude K l es ch fr om r ecove r i ng under th e Ju n e 7 a g re e m e n t, th e d istric t co u rt in iti a llye x p re ss e d su rp rise , sta tin g th a t it had “a bs ol ut el yhear d not hi ng, par t i cul ar l ys i nce [ hear i ng K l es ch’ s ] cl os i ng, t hat su g g e sts th a t [ K les c h ] is s e e k in g d a m a g e s b a se d o n th e Ju n e 7 a g re e m e n t.” A p lt. A pp. V ol . V at1575. A c c o rd in g ly , w e se e n o a b u se o f d isc re tio n h e re . T h e d istric t co u rt c o u ld pr oper l yhave de ci ded thatt he pr etr i al or derdi d noti ncl ude a c l ai m byK l es ch for d a m a g e s u n d e r th e Ju n e 7 a g re e m e n t. K les c h a rg u e d in its re p lyb rie f in th is cour tt hatL i ber t yw oul d nothave be en pr ej udi ced byt r y i ng t hatcl ai m , butt hat w a s to o late to ra ise th is a rg u m e n t. W e d o n o t o rd in a rilyc o n sid e r a rg u m e n ts ra is e d fo r t h e fir s t tim e in a re p ly b ri e f. S e e Un itedS ta tes v . Ha ll , 473 F. 3d 1295, 1301 n. 1 ( 10t h C i r . 2007) . A nd w e ca n har dl yi nfert hatL i ber t yw oul d nothave-14-

been pr ej udi ced w hen i thas had no occ as i on t o pr offe revi dence r egar di ng t he a lleg e d d a m a g e s f

ro m b re a c h o f

th e Ju n e 7 a g re e m e n t. K l es ch al s o appea r s t o cont end thatt he di s t r i ctcour t ’ s i ns t ruct i on pr event ed the j ur yfr om anycons i der at i on of the J une 7 agr eementi n as s es s i ng K l es ch’ s cl ai m s . For i ns t ance , i ts eems t o ar gue thatt he i ns t ruct i on pr ecl uded the j ur yfr om fi ndi ng t hatL i ber t yhad fr audul ent l yi nduced K l es ch t o s i gn t he J une 7 agr eement . B utt he court ’ s i ns t ruct i on w as nots o br oad. I ts ai d: “[K l es ch] cannotr ecove rdamages undert he J une 7, 2001 agr eement . ” A pl t . A pp. V ol . V at 1600. T he i ns t ruct i on pr ecl uded the j ur yonl yfr om aw ar di ng K l es ch contr actual damages undert he J une 7 agr eement . I tdi d notpr ecl ude K l es ch’ s fr aud cl ai m or r efe r ence t o t he agr eementi n as s es s i ng t hatcl ai m . W e pr es um e thatj ur i es fol l ow th e c o u rt ’s in s tru c tio n s a s g iv e n . See Q uest ar P i peli ne C o. v. G rynberg , 201 F. 3d 1277, 1287 ( 10t h C i r . 2000) . W e fi nd no err ori n t he i ns t ruct i on. B . M i s appropri at i on T he di s t r i ctcour ti ns t ruct ed the j ur yon K l es ch’ s m i s appr opr i at i on cl ai m as fo llo w s: “ A m isa p p ro p ria tio n h a s o c c u rre d w h e n o n e e ith e r w ro n g f u llyp ro fits fr om another ’ s expendi tur e of l abor , s ki l l orm oney , orcapi t al i zes w r ongful l yon c o m m e rc ia l v a lu e s e a rn e d o v e r a p e ri o d o f tim e .” A p lt. A p p . V o l. V I a t 1 7 9 0 . K l es ch obj ect ed att r i al and pr opos ed an a l t ernat i ve i ns t ruct i on t hatdi d not r equi r e Li ber t yt o have be nefi t t ed fr om t he mi s appr opr i at i on: “A m i s appr opr i at i on has occurr ed i f a pa r t yus es t he bus i nes s val ue cr eat ed by-15-

anothert o pr ofi ti t s el f or i f i ti nt ent i onal l

y ex er cis ed dom i ni on orcontr oloveran op p o rtun it y c rea ted o r o b taine dby a n o therthro u g h the exp en d itu re o f th e o ther ’s
ow n t i m e, l abor, s ki l l, orm oney. ” A p lt. A p p . V o l. I a t 1 5 1 .2 2 (e m p h a s is a d d e d ). K les c h n o ted th a t itw a s s e e k in g a n in stru c tio n “ f ro m c o n v e rsio n c a se s.” A p lt. A pp. V ol . V at1386. T he di s t r i ctcour tbas ed i t s i ns t ruct i on on Hel l erv. Lext on-A nci r a R eal Es t at e Fund, Lt d. , 8 0 9 P . 2 d 1 0 1 6 , 1 0 2 1 (C o lo. C t. A p p . 1 9 9 0 ), r ev’ d on other gr ounds , 8 2 6 P .2 d 8 1 9 (C o lo . 1 9 9 2 ), w h ich sta ted , “W e v iew th e to rt o f ‘u n fa ir m isap p rop ri ati o n ’ as o cc u rri n g w h en o n e e ith er w ron g fu ll yp rofit s fro m an o ther’s expendi tur e of l abor , s ki l l orm oney , orcapi t al i zes w r ongful l yon comm er ci al values earned ov er a peri od of ti m e. ” K l esch at t em pts t o d i st i ng uis h thi s case f r o m Hel l er b yo b se rv in g th a t “ Hel l er i nv olved profit s al l eged l ygained an d lost t hr ough i m pr opercompet i t i on, ” and i s t her efor e noti n poi nt . A pl t . R epl yB r . at 30. B ut Hel l era d d re s s e s “ u n fa irm is a p p ro p ri a tio n ” g e n e ra lly. See Hel l er , 809 P. 2d at1020–21. T h e o p in io n in n o w a ysu g g e sts th a t it s d e sc rip tio n o f th e to rt is confi ned t o a part i cul arcont ext . I ti s i r r el evantt hatt he fa ct s i n t hatcas e ar e not i dent i cal t o t he fa ct s her e. In c o n tr a s t, th e o p in io n o n w h ic h K le s c h re lie s , So l ar Syst em s & P eri ph erals, Inc. v. B urress ( In re Bu rres s) , 2 4 5 B . R . 8 7 1 (B an k r. D . C o lo. 20 0 0 ), di d notat t empt i n anyw ayt o defi ne the t or tof unfa i rm i s appr opr i at i on. T he iss u e b e fo re th e c o u rt in B urress w a s w h e th e r a d e b t w a s n o n d isc h a rg e a b le-16-

b e c a u se it w a s in c u rre d a s a re su lt o f in ten tio n a l w ro n g d o in g . T h e c o u rt w ro te: “T he fa ct s adm i t t ed to byt he D ebtorest abli sh t hat he m i sapprop ri at ed b usi ness o p p o r tu n i t i e s fo rh i s b e n e fi tt o t h e d e t r i m e n to f h i s e m p l o ye r , e ffe c t i v e l y a conver s i on. W hatm us tnow be det er m i ned byt hi s C our t , i s w hetheri tw as done w i t h i nt entt o i nj ur e the Pl ai nt i ff. ” Id. at 88 0 . B u t th is sen tenc e d o es n o t pu rpo rt t o s t at e the el ement s of m i s appr opr i at i on. I ns t ead, i tw as m er el ya des cr i pt i on of th e m isc o n d u c t as a n in tro d u c tio n to th e a n a ly sis o f th e to rtfe a so r’s in ten t. E ven m o re c lea rlyin a p p o site a re K les c h ’s c itatio n s to R e sta tem e n t (S e c o n d ) o f T o rts §§ 222A and 227, w hi ch di s cus s t he t or tof conve r s i on, notm i s appr opr i at i on. I n es s ence , w hatK l es ch s oughtw as an i ns t ruct i on on conver s i on. B ut beca us e i t s cl ai m w as al w ay s form i s appr opr i at i on, notconver s i on, t hi s ar gum ent i s unavai l i ng. T her e w as no err ori n t he mi s appr opr i at i on i ns t ruct i on. C . C ausat i on T h e th e o ryo f

d a m a g e s s e t fo rth b yK les c h in th e p re trial o rd e r w a s th a t it w a s e n tit led to th e v a lu e o f th e o p p o rtu n ityth a t L ib e rtyh a d w ro n g f u lly e x p ro p ria ted w h e n it p u rsu e d a lo n e th e a c q u isitio n o f th e G e rm a n c a b le compani es . T he pr etr i al or ders t at ed thatK l es ch w oul d bas e i t s cl ai m for d a m a g e s o n th e v a lu e o f its o p p o rt u n ity a t th e tim e o f th e e x p ro p ri a tio n . In c lo sin g a rg u m e n t K les c h a lleg e d th a t th e e x p ro p ria tio n o c c u rre d in M ayorJ une 2001.-17-

A tt r i a l K l e s c h ’ s e x p e r tt e s t i fi e d t o t h e p r i c e “ a w i l l i n g b u ye rw o u l d p a y a w i l l i ng s el l er ” fort he r i ghtt o K l es ch’ s s har e of the futur e Tel ekom deal as of M ay2001. A pl t . A pp. V ol . I I I at931. T he expe r tdi d notadj us thi s cal cul at i ons fort he pos s i bi l i t yt hatt he dea l m i ghtnotconcl ude; i ns t ead, he s t at ed thathe had a ss u m e d th a t th e d e a l w o u ld b e c o n su m m a ted a n d th a t th e ju ryn e e d e d “ to r ecogni ze a nd t o m ake a n adj us t m entfort he r eal i t yw hi ch i s t hatas of M ay2001, nobodyknew fors ur e w hethert he dea l w oul d have gone t hr ough. ” Id. T hu s, K les c h ’s c o m p u tatio n o f d a m a g e s w o u ld n o t b e a ffe c ted b yw h e th e r th e d e a l w ith T el ekom w as ul t i m at el yappr oved byt he G erm an C ar t el O ffi ce. I ns t ead, t he pos s i bi l i t yof the C ar t el O ffi ce’ s di s appr ovi ng t he ac qui s i t i on w oul d have be en fa c to re d in to th e a ss e ss m e n t in M a y2 0 0 1 o f th e v a lu e o f

K les c h ’s in ter e st. K l esch ne vert heles s compl ai ns t hatt he j ur yi ns t ruct i on on caus at i on re q u ir e d th e ju ry to d e n yre c o v e ry o n th e g ro u n d th a t th e d e a l la te r fe ll th ro u g h . T he ch al l eng ed instruct i on w as as fol l ow s:

T he w or d “ca us e” a s us ed i n t hes e i ns t ruct i ons m eans an ac tor fai l ur e t o actt hati n natur al and pr obabl e s equenc e pr oduced the c laim e d inju ry . It i s a c a u se w ith o u t w h ich th e c laim e d inju ryw o u ld nothave ha ppened. I f m or e than one a ctorfai l ur e t o actcontr i but ed t o t he cl ai m ed i nj ur y , t hen ea ch ac torfai l ur e t o actm ayhave be en a c aus e of the i nj ur y . A caus e does nothave t o be the onl ycaus e ort he l as tor near es tcaus e. I ti s enough i f the ac torfai l ur e t o actj oi ns i n a n a tu ra l an d p ro b a b le w a yw ith so m e o th e r a c t o r fa ilu re to a c t to caus e s om e oral l of the cl ai m ed i nj ur y . T hus , i f the defendant ’ s act orfai l ur e t o acts ubs t ant i al l ycontr i but es t o an i nj ur y , i ti s a ca us e of t hati nj ur y , even though ot herfac t or s , i ncl udi ng fac t or s bey ond t he d e fe n d a n t’ s c o n tr o l, m a ya ls o h a v e c o n tr ib u te d to th e c la im e d inju ry.-18-

Th e d e fen da n ts’ c o n d u c t is n o t a su b sta n tia l co n trib u tin gc a u se in br i ngi ng abouthar m t o the plai nt i f f i f the har m w ould have be en s u s ta in e de v e n if th e d e fe n da n t h a dn o t c o m m itte dth e w r o n g fu l a c t. T he pl ai nt i ff mustpr ove thatt he defendant ’ s conducti s a s ubs t ant i al c o n t r i b u t i n g c a u s e o f

t h e i nj u r y. O n e ’s c o n d u c t is n o t a c a u se o f a n o th e r’s inju rie s, h o w e v e r, if i n or dert o br i ng abouts uch i nj ur i es , i tw as nece s s aryt hathi s orher c o n d u c t co m b in e o r jo in a n in ter v e n in g c a u se th a t als o c o n trib u ted to caus e the i nj ur i es . A n i nt er veni ng caus e i s a ca us e thatw oul d not have be en r eas onabl yfor es een bya r eas onabl ycar eful per s on under t he sam e or si m i l ar ci rcum st ances. A p lt . A p p . V o l. V I at 17 9 5 (em p h asis ad d ed ). K l esch t akes i ssue w i t h the i nst ruct i on ’s st at em ent that “[t ]he defen dan t s’ conducti s nota s ubs t ant i al contr i but i ng caus e i n br i ngi ng abouthar m t o t he pl ai nt i ff i f the harm w oul d have be en s us t ai ned eve n i f the defendanthad not comm i t t ed the w r ongful act . ” Id. T hi s i s a s t r ai ght forw ar d s t at ement of but - for caus at i on. K l es ch ar gues , how ever , t hatunderC ol or ado l aw , “conduc tcan be a s ubs t ant i al caus e eve n w her e the harm w oul d have ha ppened a nyw ayi f the defe ndant ’ s act i ons as w el l as t he othercaus al for ces w oul d have e ach be en su fficie n t to b rin g a b o u t th e h a rm .” A p lt. B r. at 3 5 . It p o in ts to a c las sic e x a m p le fr om t or tl aw : w hen a ne gl i gent l ycaus ed fi r e and a l i ght ni ng- caus ed fi r e combi ne and burn dow n a hous e, bot h ar e ca us es of damage t o t he hous e and the t or t fea s or w ho s t ar t ed one of

t he fi r es i s l i abl e, even i f ei t herfi r e w oul d have be en s uffi ci ent to c a u s e th e s a m e d a m a g e . See R est at em ent ( S econ d) of T ort s § 43 2 cm t . d, i l l us. 4.-19-

W e u n d e rsta n d K les c h to a n a lo g ize th e tw o fire s to tw o c a u se s o f h a rm in th is c a se : (1 ) L ib e rty ’s e x p ro p ria tio n o f K les c h ’s o p p o rtu n ityfo r th e d e a l w ith T el ekom, and ( 2) t he G er m an C ar t el O ffi ce’ s r ej ect i on of thatdeal . K l es ch s e e ms t o be s ugges t i ng thatt he ca us at i on i ns t ruct i on i m pr oper l yt ol d t he j ur yt o deny r ecove r yfort he expr opr i at i on i f the C ar t el O ffi ce’ s r ej ect i on m eantt hatK l es ch w oul d have ga i ned nothi ng anyw ay . Per haps t hi s ar gum entw oul d have made s ens e i f K l es ch had be en s eeki ng damages equal t o w hati tw oul d have ga i ned had th e d e a l g o n e th ro u g h . B u t th a t w a s n o t w h a t K les c h so u g h t. T h e a rg u m e n t is i ncons i s t entw i t h K l es ch’ s damages t heory , w hi ch w as t he theoryconvey ed byt he co u rt ’s un ch all en g ed instruction s to the juryo n d am ag es. In p arti cu lar, the ju ry w as t ol d t hatevent s aft erL i ber t y ’ s m i s conductw er e i r r el evant . I ns t ruct i on N o. 58 s ai d: A nydamages s uffe r ed byK l es ch & C om panybeca m e fi xed at t he t i m e of Li ber t yM edi a’ s w r ongful conduct . I f y ou fi nd forK l es ch & C om panyon anyof i t s cl ai m s , y ou m us tdet er m i ne the amount of damages s uffe r ed byK l es ch & C om panyas of the t i m e of the br eac h o r o th e r m is c o n d u c t. E vents t aki ng pl ace s ubs equentt o the t i m e of the b reach a re not generall y rel evan tt o the cal culat i on of dam ag es. A pl t . A pp. V ol . V I at1794 ( emphasi s added) . T he j ur yw as s i m i l ar l yi ns t ruct ed th a t “ L o s s o f

[ K le s c h ’s ] p ro p e rt yo r a s s e ts c a u s e d b y[ L ib e rt y ’s ] m is c o n d u c t . . . ar e det erm i ned byt he fa i rm ar ketval ue of the as s etatt he t i m e of the l os s . T he fai rm ar ketval ue i s t he pr i ce a tw hi ch the pr oper t yoras s etw oul d change hands b e tw e e n a w illin g b u y e r a n d a w illin g s e lle r.” In s tru c tio n N o . 5 7 , i d. at1793.-20-

K l es ch’ s damages w er e ther ebyfi xed as of M ay( orpos s i bl yJ une) 2001. T he C ar t el O ffi ce’ s r ej ect i on of the dea l w oul d have no e ffe cton t he damages cal cul at i on. T hatr ej ect i on occurr ed w el l aft erJ une 2001, and the fa ctof the rejecti o n co u ld n o t cha n g e the p rob ab il ityas o f M ayo r Jun e 2 0 0 1 o f th e d ea l’ s rej ect i on . A ccordi ng l y , t he jur y , i f i tcom pli ed w i t h the cou rt ’s i nst ruct i on s, c o u ld n o t h a v e d e n ie d K le s c h re c o v e ry b a s e d o n th e a c tio n o f th e C a rt e l O ffic e . ( N o one has c o n t e n d e d , o rc o u l d c o n t e n d , t h a tt h e r ej e c t i o n wa s c e r t a i n a tt h e t i me of the al l eged e xpr opr i at i on. ) A l t hough t he ca us at i on i ns t ruct i on m ayhave be en fl aw ed ( w e nee d notdeci de the i s s ue) , w e ar e conf i dentt hatt he fl aw al l eged by K les c h c o u ld n o t h a v e a ffe c ted th e v e rd ict. I I I . CO NC L US I ON T h e d i s t r i c tc o u r t ’ s j u d g me n ti s AF F I RMED . ENT ERE D FOR T HE COURT H a rris L H a rtz C i r cui tJ udge