T hi s di s pos i t i on i s notappr opr i a t e f orpubl i c a t i on and i s notpr e c e de nt * e xc e pta s pr ovi de d by 9th C i r . R . 36- 3.

T he H onor abl e T e naC a m pbe l l , S e ni orU ni t e d S t a t e s D i s tr i c tJ udge ** f orthe D i s tr i c tof

U t a h, s i tt i ng by de s i gna t i on.

NOT F OR P UB L I CAT I ON UN I TE D STATE S C OU RT OF APPE ALS F O R T H E N IN T H C IR C U IT A T L A S F L O O R I N G , L L C , a n A r i z ona l i m i t ed l i ab i l i ty co m p an y, P la in tif f - c o u n te r - d e f

e n d a n t – A pp el l ee , v. P O R C E L A N I T E S . A . D E C . V . , af or e i gn c o rp o r a tio n , D B A G ru p o P o r c e la n ite S .A ., D e f e n d a n t- c o u n te r - c la im a n t – A p p e lla n t. N o. 09- 17036 N o. 10- 15512 D . C. N o . 2 : 0 7 - CV - 0 1 7 4 1 - SRB ME MOR AN DU M *

A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt

f orthe D i s tr i c tof

A r i z ona S us a n R . B ol t on, D i s tr i c tJ udge , P r e s i di ng A r gue d a nd S ubm i tt e d F e brua ry14, 2011 S a n F r a n c is c o , C a lif

o rn ia B ef ore: O ’ S C A N N L A IN and T R O T T , C i rc ui tJudg es , and C A M P B E L L , D i stri ct ** Judg e. 

# FI LED APR04 2 011 M OLLY C. DW Y ER, CLERK U . S. C O U R T OF APPE ALS2

F ol l ow i ng a j ury ver di cti n thi s di vers i ty a ct i on , the di stri ctcourtdeni ed P or c e l a ni t e ’ s r e ne w e d m ot i ons f orj udgm e nta s am a tt e rof l a w unde rF e d. R . C i v. P . 5 0 ( b ) a n d its m o tio n f o ran e w tr ia l u n d e rF e d . R . C iv . P . 5 9 ( a ) . P o r c e la n ite appe a l e d, a nd w e a f

f i rm . P or c e l a ni t e a l s o appe a l e d the di s tr i c tc ourt ’ s a w a r d of a tto rn e y s ’ f

e e s a n d c o s ts ( s e e C o n s o lid a te d A p p e a l N o . 1 0 - 1 5 5 1 2 ) . B u t in its o p e n in g b r ie f

P o r c e la n ite d id n o t p r e s e n t a r g u m e n t s u p p o rtin g th a t c la im . Co n s e q u e n t l y , Po r c e l a n i t e w a i v e d th a ti s s u e o n ap p e a l . M a rt i n e z - Se rr a n o v . I N S, 94 F . 3d 12 56 , 12 59 (9th C i r. 19 96 ). 1. S tan d ard of R evi ew W e r e vi e w the de ni a l of am ot i on f

orj udgm e nta s am a tt e rof l a w de novo, a nd vi e w the e vi de nc e i n the l i ghtm os tf a vor abl e t o A t l a s . L a ke s i de - S c ottv. M ul tno m ah C nty. , 55 6 F . 3d 79 7, 80 2 (9th C i r. 20 09 ) ( “ Judg m entas a m att erof l aw i s pr ope rw he n the e vi de nc e pe rm i t s onl yone r e a s onabl e c onc l us i on a nd the c onc l us i on i s c ontr a ry t o tha tr e a c he d bythe j ury . ” ) . W e r e vi e w f orabus e of di s c r e t i on adi s tr i c tc ourt ’ s de ni a l of am ot i on f

orane w tr i a l a nd m us tuphol d a j ury ve r di c ti f

i ti s s upport e d by s ubs t a nt i a l e vi de nc e . G uyv. C i tyof S a n D i e go, 60 8 F . 3d 58 2, 58 5 (9th C i r. 20 10 ).3

2. L i ab i l i ty a. B re ach of C on tr act P o rc elan it e c h allen g es th e f ac tu al b as is fo r th e ju ry ’s v er d ict o n A tl as ’s c o n tr a c t c la im s . A t tr ia l, e a c h p a rtyp r e s e n te d c o n f lic tin g te s tim o n yab o u t th e ir unde r s t a ndi ng of

the c ontr a c ta nd the i ri nt e nt i ons . T he j uryc hos e t o be l i e ve w i tness es w ho se t es t i m on y f avored A t l as ’ s c on tra cti nt erpret at i on . T hi s C ou rtm ay n o t s e c o n d - g u e s s th e ju ry ’s c r e d ib ilityf in d in g s o rw e ig h in g o f

th e e v id e n c e . I d . A re vi ew of the re cord show s thatthe j ury ver di cton A t l as ’ s c on tra ctcl ai m s w as s upport e d by s ubs t a nt i a l e vi de nc e . I d. ; L a ke s i de - S c ott , 556 F . 3d a t802. b. Fr a ud P or c e l a ni t e c ha l l e nge s the j ury ’ s f i ndi ng of i nt e ntt o de f

r aud. A r e vi e w of the re cord show s thatsuff i ci entevi dence exi st s t o sup po rtthe j ury’ s f i nd i ng that P orce l ani t e i nt ended t o and di d m ake f raud ul entm i sr epre se nt at i on s, so the C ou rt w ill n o t d is tu rb th e v e r d ic t o n th a t b a s is . G u y , 6 0 8 F .3 d a t 5 8 5 . P orce l ani t e a l so cont ends thatA t l as di d n otpres entany e vi dence that P o r c e la n ite ’s m is r e p r e s e n ta tio n c au s e d A tla s ’s lo s t p r o f it d a m a g e s . P o r c e la n ite d o e s n o t p r o v id e a n y au th o r ityto s u p p o rt its p r o p o s itio n th a t av ic tim o f f r au d is p ro h ib it ed fr o m re co v er in g lo st p ro fits ev en if a ju ry fin d s th at th e f ra u d v icti m ’s r e l i a nc e on the m i s r e pr e s e nt a t i on c aus e d da m a ge . V i e w i ng the e vi de nc e i n al i ght4

m ostfa vo rabl e t o A t l as , the C ou rtconcl ud es thata r ea sonabl e j ury c ou l d fi nd that A tla s r e lie d o n P o r c e la n ite ’s m is r e p r e s e n ta tio n s , w h ic h c au s e d d a m a g e to A tla s . I d .; L a k e s id e - S c o tt, 5 5 6 F .3 d a t 8 0 2 - 0 3 . A c c o r d in g ly , th e ju ry ’s f r au d v e r d ic t is v a lid . c. In te n ti on alIn te rf er en ce w i th B u si n es s E xp ec tan ci es P o r c e la n ite a r g u e s th a t A tla s d id n o t h a v e av a lidb u s in e s s e x p e c ta n c yin its de a l i ngs w i th L ow e ’ s a nd tha tA t l a s f a i l e d t o pr ove tha ta nyi nt e r f e r e nc e by P o rcel an i t e cau sed A t l as’ s i n j u ri es. R ev i ew i n g th e ev i d en ce i n a l i g h tm o st f a vor abl e t o A t l a s , the C ourthol ds tha tthe r e w a s s uf f i c i e nte vi de nc e t o s upportthe ju ry ’s v er d ict th at A tl as h ad a v alidb u sin es s e x p ec tan cy , an d th at P o rc elan it e’s a c t i ons i nt e r f

e r e d w i th tha te xpe c t a nc y . G uy , 608 F . 3d a t585; L a ke s i de - S c ott , 556 F . 3 d at8 0 2 -0 3 . S ee al so A n tw erp D i am o n d E x ch . o f A m . , In c. v . B ett er B u s. B ureau o f M ar i copa C nty. , Inc. , 63 7 P . 2d 73 3, 74 0 (A ri z. 19 81 ). 3. A tl as’s E xp er t W i tn es s on D am ag es P orce l ani t e c hal l enges the adm i ss i bi l i ty of the t es t i m on y of A t l as ’ s dam ages e xpe rt , B r a dl e y P r e be r , unde rD aube rtv. M e rr e l l D ow P ha rm s . , I nc . , 43 F . 3d 1311 ( 9 th C ir . 1 9 9 5 ) . P o r c e la n ite d id n o t c h a lle n g e M r . P r e b e r ’s te s tim o n yo n th e b a s is o f h is q u a lif

ic a tio n s o rth e r e le v a n c e o f h is o p in io n s b u t o n th e b a s is th a t h is concl usi on s w er e unrel i abl e bec ause he used an un soun d m etho do l og y. M r.5

P r e b e r , aC P A , u s e d ap r o f e s s io n a llyr e c o g n iz e d m e th o d o f c a lc u la tin g lo s t p r o f

its . T he di stri ctcourtcorr ec t l y det erm i ned thatP orce l ani t e’ s c om pl ai nt s abo utM r. P re ber’ s t es t i m on y w entt o the w ei gh t , no tthe adm i ss i bi l i ty, of the expert te s tim o n y . S tilw e ll v . S m ith & N e p h e w , I n c ., 4 8 2 F .3 d 1 1 8 7 , 1 1 9 2 ( 9 th C ir . 1 9 9 5 ) . T h e d i stri ctco u rt ’ s d eci si o n t o ad m i tth e t est i m o n y o f M r. P reb er w as n o tan ab u se of di sc re t i on . H um etri x, Inc. v. G em pl us S . C . A . , 26 8 F . 3d 91 0, 91 9 (9th C i r. 20 01 ). A ddi t i ona l l y , c ontr a ry t o P or c e l a ni t e ’ s a r gum e nt , the di s tr i c tc ourtdi d not abus e i t s di s c r e t i on w he n i ta l l ow e d M r . P r e be rt o t e s t i f yabouthi s upda t e d da m a ge ca l cul at i on s. M r. P re ber di d n oti ss ue a new re po rt . R ather, he up dat ed hi s r eport ( us i ng the s a m e m e thodol ogy ) ba s e d on m or e c urr e nti nf orm a t i on r e f

l e c t i ng o n g o in g d a m a g e s . T h is w a s n o t e rr o r . U - H au l I n t’l, I n c . v . L u m b e rm e n s M u t. C a s . C o ., 5 7 6 F .3 d 1 0 4 0 , 1 0 4 3 ( 9 th C ir . 2 0 0 9 ) . 4. D am ag es In aw ar di ng dam ages , a j ury has broad d i sc re t i on i n w ei gh i ng the evi dence, a n d th e C o u rt is n o t to s u b s titu te its ju d g m e n t f o rth a t o f th e ju ry . D e l M o n te D u n e s a t M o n te r e y , L td . v . C ityo f M o n te r e y , 9 5 F .3 d 1 4 2 2 , 1 4 3 5 ( 9 th C ir . 1 9 9 6 ) .

“ W e m us tuphol d the j ury ’ s f i ndi ng unl e s s the a m ounti s gr os s l ye xc e s s i ve or6

m ons tr ous , c l e a r l y nots upport e d by the e vi de nc e , orba s e d onl yon s pe c ul a t i on or gue s s w ork. ” I d. a. C om p en satory D am ag es P orce l ani t e c hal l enges the j ury’ s c om pensat ory dam ages aw ar d, ar gu i ng that the a w a r d w a s ba s e d upon s pe c ul a t i on, i m pr ope r l ypr ovi de d doubl e r e c ove ry , a nd w as i m perm i ss i bl e und erthe ec on om i c l oss doctri ne.

i . S pe c ul a t i on C o n tr a ry to P o r c e la n ite ’s c o n te n tio n , th e ju ryd idn o t s p e c u la te w h e n it cal cu l at ed th e d am ag es aw ard . U n d er A ri zo n a l aw , A t l as, th e p rev ai l i n g p arty, s how e d the a m ountof

i t s da m a ge s w i th r e a s onabl e c e rt a i nty . G i l m or e v. C ohe n, 386 P . 2d 81, 82 ( A r i z . 1963) . A t l a s ’ s da m a ge s e xpe rtw i tne s s t e s t i f i e d tha tthe c ons e rva t i ve hi gh e nd of A t l a s ’ s t ot a l da m a ge s ( f orthe l i abi l i tythe or i e s c om bi ne d) w as $3 0. 7 m i l l i on . T he j ury aw ar ded $ 32 . 3 m i l l i on . In addi t i on t o the expert t es t i m on y ( i ncl ud i ng hi s dam age s um m ary t abl es ), the re cord cont ai ned o ther e vi de nc e pr ovi di ng ar e a s onabl e ba s i s f orthe s l i ght l yhi ghe ra m ounta w a r de d by the j ury . T he e xpe rtpr e s e nt e d pr oj e c t i ons aboutf utur e s a l e s be tw e e n the da t e of hi s dam age e st i m at e and the t i m e of tri al , and A t l as i ntrodu ce d evi dence that P orce l ani t e c on t i nu ed m aki ng sa l es t o L ow e’ s a ft erthe dam ages peri od ca l cul at ed by the e xpe rtw i tne s s . T hi s i s notas i tua t i on w he r e the a w a r d i s “ c l e a r l ynot7

s upport e d by the e vi de nc e . ” L os A nge l e s M e m ’ l C ol i s e um C om m ’ n v. N F L , 791 F . 2d 1356, 1360 ( 9th C i r . 1986) . A c c or di ngl y , the C ourtuphol ds the c om pe ns a t ory da m a ge s a w a r d.

i i . D ou bl e R ec ov ery T he C ourtf

i nds tha tthe j urydi d nota w a r d dupl i c a t e da m a ge s t o A t l a s . T he n atu re o f th e j u ry’ s v erd i ctd o es n o tsu g g estd o u b l e reco v ery. T h e ex p ertw i tn ess t e s t i f i e d aboutl os tpr of

i t s w i thoutr e l e ga t i ng the da m a ge s t o apa rt i c ul a rthe oryof liab ility . T h e ju ry a llo c a te d th e to ta l a m o u n t o f d a m a g e s to th e d if

f e r e n t th e o r ie s . A t l as i s notre qu i re d t o d em on stra t e how the j ury r ea ched the dam ages am ou nt . It i s e no ug h thata r at i on al e f or the j ury’ s di vi si on of the dam ages t ot al can b e der i ved f r om the r e c or d. A t l a nt i c & G ul f S t e ve dor e s , I nc . v. E l l e rm a n L i ne s , L t d. , 369 U .S . 3 5 5 , 3 6 5 ( 1 9 6 2 ) ; M o r is s e tte v . U n ite d S ta te s , 3 4 2 U .S . 2 4 6 , 2 7 6 ( 1 9 5 2 ) . F urthe rm or e , P or c e l a ni t e , i n f a i l i ng t o pol l the j uryora tt e m ptt o r e s ol ve a m bi gui t i e s i n the ve r di c tbe f or e the j uryw a s e xc us e d, c a nnotnow us e a ny u n c e rta in tyo rc o n f

u s io n to s e t a s id e th e v e r d ic t. i i i . E c onom i c L os s D oc tr i ne T he ec on om i c l oss doctri ne do es no tbar A t l as ’ s r ec ov ery of c om pensat ory t ortda m a ge s . A r i z onac ourt s ha ve appl i e d the e c onom i c l os s doc tr i ne onl yt o noni nt ent i on al t ort s i n the prod uct s l i abi l i ty and construct i on defe ct s c on t ext . F l agst af fT hi s thi r d f a c t ori s notappl i c abl e he r e be c aus e the pa rt i e s di d notpr e s e nt 1 c o m p a r ab le c iv il p e n a ltie s . P o r c e la n ite ’s c ite to c r im in a l p e n a ltie s is n o t r e le v a n t. 8 A f f or dabl e H ous i ng L i m i t e d P a rtne r s hi p v. D e s i gn A l l i a nc e , I nc . , 223 P . 3d 664 (A ri z. 20 10 ) ( e n banc ) . T he r e i s no l ogi c a l c onne c t i on be tw e e n thos e c ont e xt s a nd the e xc l us i ve di s tr i but i on c ontr a c ta ti s s ue he r e . A dopt i ng P or c e l a ni t e ’ s pos i t i on w o u ld r e s u lt in a n im p e rm is s ib le e x p a n s io n o f A r iz o n ala w . T i ckno r v. C ho i ce H ot el s I nt ’ l , Inc. , 26 5 F . 3d 93 1, 93 9 (9th C i r. 20 01 ). b . P u n i ti ve D am ag es P orce l ani t e c on t ends thatthe $2 5 m i l l i on pu ni t i ve dam ages aw ar d w as unc ons t i tut i ona l be c aus e i tw a s gr os s l ye xc e s s i ve . S outhe rn U ni on C o. v. I rvi n, 56 3 F . 3d 78 8, 79 1 (9th C i r. 20 09 ). W hen con si deri ng the const i tut i on al i ty of a puni t i ve da m a ge a w a r d, the C ourtc ons i de r s the de gr e e of r e pr e he ns i bi l i tyof

the s a nc t i one d pa rty ’ s a c t i ons , the di s pa r i tybe tw e e n the a c tua l a nd puni t i ve da m a ge a w a r d s , a n d th e d if

f e r e n c e b e tw e e n th e p u n itiv e d a m a g e a w a r d a n d c o m p a r ab le c i vi l pe na l t i e s . S t a t e F a rm M ut . A ut o. I ns . C o. v. C a m pbe l l , 538 U . S . 408, 418 1 (200 3). P or c e l a ni t e c ons c i ous l y di s r e ga r de d A t l a s ’ s i nt e r e s t s a nd r i ght s . A l though no ph ys i ca l harm occurre d, P orce l ani t e’ s s el fi sh cond uctw as m ot i vat ed by greed a n d r e s u lte d in p r o f

its f o rP o r c e la n ite a t A tla s ’s e x p e n s e . P o r c e la n ite c o n s c io u s lyP or c e l a ni t e a r gue s tha ti ta c t e d on the hone s tbe l i e f tha tL ow e ’ s w oul d no 2 l on ger s t ock A t l as ’ s produ ct s. P orce l ani t e f urther argues thatthe di stri ctcourt e rr e d i n e xc l udi ng f

r om e vi de nc e a n e - m a i l f r om L ow e ’ s t o tha te f

f e c t . A s s um i ng, w i thoutde c i di ng, tha tthe e - m a i l s houl d ha ve be e n a dm i tt e d a s e vi de nc e , the co n t en tan d w ei g h to f th atl o n e e-m ai l i s n o ten o u g h t o t i p th e al read y h eav i l yw ei gh t ed sc al e i n P orce l ani t e’ s f avor. 9 a n d r e p e a te d lyc o n c e a le d its a c tio n s a n d m a d e m illio n s o f d o lla r s f r o m its s a le s to L o w e ’s . T h e “in f

lic tio n o f e c o n o m ic in

ju ry , e s p e c ia llyw h e n d o n e in te n tio n a lly 2 throu gh af

fi rm at i ve ac t s of m i sc on du ct. . . can w arranta s ub st ant i al penal ty. ” B M W of N . A m . , Inc. v. G ore, 51 7 U . S . 55 9, 57 6 (19 96 ). T he di s pa r i ty be tw e e n the a c tua l a nd puni t i ve dam a ge a m ount s i s not si gn i fi cant . T he j ury’ s pun i t i ve dam ages aw ar d w as approx i m at el y 1. 5 t i m es A t l as’ s t o rtd am ag es. T h i s i s b el o w th e rat i o s th i s C o u rth as ap p ro v ed as c ons t i tut i ona l . S e e , e . g. , S outhe rn U ni on, 563 F . 3d a t792; P l a nne d P a r e nthood of the C ol um bi a/W i l l a m e tt e , I nc . v. A m . C oa l i t i on of L i f e A c t i vi s t s , 422 F . 3d 949, 9 6 2 ( 9 th C ir . 2 0 0 5 ) ; Z h a n g v . A m . G e n . S e a f o o d s , I n c ., 3 3 9 F .3 d 1 0 2 0 , 1 0 4 4 ( 9 th C i r. 20 03 ). F or the foregoi ng re as on s, thi s C ou rtconcl ud es thatthe pu ni t i ve dam ages aw ard w as n o tg ro ssl y ex cessi v e an d d i d n o tv i o l at e P o rcel an i t e’ s d u e p ro cess ri g h t s.10

In su m , th er e is n o b as is to d istu rb th e ju ry ’s d eter m in atio n o f A tl as ’s co m p en sat o ry o r p u n i t i v e d am ag es. AF F I RME D.