*Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be

published and is not precedent except under the limited circumstances set forth in 5TH CIR. R.

47.5.4.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 05-11359

WAVELINQ, INC.; ET AL.,

Plaintiffs,

WAVELINQ, INC.,

Plaintiff–Appellee–Cross Appellant,

v.

JDSLIGHTWAVE PRODUCTS GROUP, INC.; JDS UNIPHASE, INC., formerly

known as JDS FITEL, Inc.,

Defendants–Appellants–Cross Appellees.

Appeal from the United States District Court 

for the Northern District of Texas

No. 3:01-CV-1752

Before KING, GARZA, and OWEN, Circuit Judges.

PER CURIAM:*

Wavelinq, Inc. and Jim Seago (collectively Wavelinq) sued JDSLightwave

Products Group, Inc. and JDS Uniphase, Inc. f/k/a JDS Fitel, Inc. (collectively

JDS) for royalties it alleged were owed under an asset purchase agreement. A

jury returned a verdict in favor of Wavelinq, and all parties have appealed. The

United States Court of Appeals

Fifth Circuit

F I L E D

August 14, 2008

Charles R. Fulbruge III

Clerk
No. 05-11359

2

district court erred in applying the Texas prejudgment interest rate, and we

accordingly reverse and remand to the district court for further proceedings. In

all other respects, we affirm the judgment of the district court.

I

Wavelinq, Inc. and its sole shareholder, Jim Seago, designed and

manufactured a wavelength monitoring unit (WMU) for fiberoptic transmission

systems. JDS purchased Wavelinq and its assets in exchange for cash, a job at

JDS for Seago, and an “earn-out” provision. The earn-out provision stated that

JDS would pay Seago seven percent of product sales each year for three years.

The annual earn-out amounts were capped at $1,000,000, $1,500,000, and

$2,500,000 respectively in the first, second, and third years for a total of

$5,000,000. JDS was responsible for calculating how much it owed in earn-out

payments within thirty days of the end of each year.

JDS failed to provide any earn-out statements to Wavelinq for the firsttwo

years. After the third year, JDS supplied a vague earn-out statement that

itemized sales for each year: the statement merely listed a net revenue for each

JDS location but did not identify what products were included in the

calculations, the price of the units sold, how many units were sold, or to whom

the units were sold. JDS does not dispute that it owes Wavelinq $897,773 as

reflected in this earn-out statement, but JDS has not paid anything to Wavelinq

because it argues that a portion of the contract does not require payment until

any disputes are resolved.

Wavelinq sued JDS for breach of contract, claiming that JDS failed to

include certain products in the earn-out statement and also left out a number of

sales for the products that were included. The case was tried before a jury.

The jury charge was divided into two sections: liability and damages. The
No. 05-11359

3

section on liability asked whether JDS failed to comply with the Asset Purchase

Agreement with regard to three separate categories: (1) “disputed products,”

products that Wavelinq contended were within the earn-out provision;

(2) “undisputed products,” products JDS had included within the earn-out but

for which Wavelinq contended the sales amounts were understated; and

(3) “earn-out statements,” amounts reflected on JDS’s yearly statements to

Seago, which the parties agreed would be owed but disputed when payment was

required. The second section asked the jury to assess damages for any of the

three categories to which it had answered “yes”in the first section and presented

a blank space for each of the three categories.

The jury found that JDS breached the agreement with regard to all three

categories. The jury was apparently confused, however, in answering the

damage questions. The jury initially returned a verdict allocating nothing for

the first two categories, despite an affirmative answer to the liability questions,

butit allocated $5,000,000 for the earn-out statements category, even though the

parties agreed on the amount owed, $897,773. 

The district court gave the jury additional instructions. The jury was

instructed that they should leave the first two categories blank if they agreed

with JDS, but if they agreed with Wavelinq, they should allocate the

$5,000,000—the maximum amount under the Asset Purchase Agreement if all

of the yearly caps were met—among all three categories. The district court

specifically pointed the jury to two exhibits, one showing Wavelinq’s model for

damages and another showing the amount claimed for earn-out statements. The

district courttold the jury thatifthey agreed with Wavelinq,they should consult

these exhibits, subtracting the damages for undisputed products and earn-out

statements from the $5,000,000 cap to reach the amount available for disputed
No. 05-11359

2 Anthony v. Chevron USA, Inc., 284 F.3d 578, 583 (5th Cir. 2002).

3 FED. R. CIV. P. 50(a).

4

Int’l Interests, L.P. v. Hardy, 448 F.3d 303, 306 (5th Cir. 2006) (“In diversity cases, a

federal court must follow the choice of law rules of the forum state . . . .”). “The Supreme Court

of Texas has recognized that contractual choice of law provisions should generally be

enforced . . . .” Id. at 306-07 (citing DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 677 (Tex.

1990)).

4

products. The jury returned a second verdict, allocating $1,500,000 for disputed

products, $750,000 for undisputed products, and $2,750,000 for earn-out

statements. Following postverdict motions, the district court reduced the

damages for earn-out statements to $897,773 for a total verdict of $3,147,773 in

favor of Wavelinq. JDS appeals, and Wavelinq cross-appeals.

II

JDS contends thatit was entitled to judgment as a matter of law that none

of the disputed products are included within the earn-out provision. We review

a district court’s denial of judgment as a matter of law de novo,

2

finding

judgment as a matter of law appropriate when “a party has been fully heard on

an issue . . . [and] a reasonable jury would not have a legally sufficient

evidentiary basis to find for the party on that issue.”3 At issue are broadband

wavelength lockers, narrowband wavelength lockers, lasers with integrated

monitors–lockers, and integrated power monitors–channel monitors. Relatedly,

JDS contends that it was error for the jury to determine whether the agreement

had been breached by the failure to include disputed products in the earn-out

statements. 

Due to a choice of law clause in the Asset Purchase Agreement, Ontario

law controls the agreement.4 Under Ontario law, “[t]he cardinal rule of contract
No. 05-11359

5 Venture Capital USA Inc. v. Yorkton Sec. Inc., [2005] 75 O.R.3d 325, 333 (quoting

KPMG Inc. v. Canadian Imperial Bank of Commerce, [1998] O.J. No. 4746).

6 Prenor Trust Co. of Can. v. Kerkhoff Props. Inc., [1994] 21 Alta. L.R.3d 122, ¶ 16.

5

interpretation ‘is that the court should give effect to the intention of the parties

as expressed in their written agreement,’ and where the intention of the parties

‘is plainly expressed in the language ofthe agreement,the court should not stray

beyond the four corners of the agreement.’”5 The only outside evidence allowed

is the commercial context of the contract “to show the purpose for which various

contractual provisions were included.”6

The earn-out provision defined “product sales” as follows:

“Product Sales” means wavelength monitoring or spectral

analysis devices employed in Wavelength Division

Multiplexing (WDM) network applications that are

manufactured and sold by JDS and its subsidiaries and its

successors (including successors by merger) as determined by

calculating the gross invoiced amount less returns and other

discounts (other than trade discounts and receivable discounts)

as determined in accordance with GAAP. For greater clarity,

these “Products”:

(1) will provide accurate measurements of optical

performance parameters such as wavelengths,

linewidths, intensity levels, noise floor and optical

signal-to-noise ratio; and

(2) may incorporate, but are not limited to, grating,

photodetector array and DSP (Digital Signal Processing)

technologies.

Testimony at trial described the basic processes involved in fiberoptics

transmission systems. In the most basic fiberoptic transmission system, data

is transmitted through fiberoptic cable with lasers. A laser on one end will flash

a light, and a receiver on the other end detects light pulses. A basic fiberoptic
No. 05-11359

6

transmission allows a single channel of light. 

A more advanced system can send multiple light waves through a single

fiberoptic cable at the same time. The receiver unit is capable of identifying a

large number of light pulses simultaneously, distinguished by their colors and

reading data based on which discrete lights are on and off at certain times. This

type of multicolored light transmission system is known as wavelength division

multiplexing (WDM). Each light pulse within the WDM is referred to as a

channel.

The color of the laser light is determined by the wavelength of the light

pulses. Because a large number of colors can be broadcast at the same time over

the same cable,the wavelengths need to be monitored to ensure that each signal

is the proper color. JDS purchased a Wavelinq device that was a WMU.

Wavelength monitoring is basically controlling the subtle shades of the laser

colors. Channel monitoring and wavelength monitoring are interchangeable

terms. The WMU also performs a power monitoring function that ensures that

the lights from the laser are bright enough to reach the receiver on the other end

of the fiberoptic network.

Another type of relevant technology is spectral analysis devices. These

monitor the power levels at various individual wavelengths as opposed to the

device as a whole.

The definition in the earn-out agreement lists a number of characteristics

for “product sales.” The devices must be “wavelength monitoring or spectral

analysis devices employed in Wavelength Division Multiplexing (WDM) network

applications.” Thus they must either monitor the wavelength, color, and channel

of the light or monitor power at wavelengths. They must also be used in WDM

(multichannel) network applications.
No. 05-11359

7

The agreement further states that products “will provide accurate

measurements of optical performance parameters such as wavelengths,

linewidths, intensity levels, noise floor and optical signal-to-noise ratio;

and . . . may incorporate, but are not limited to, grating, photodetector array and

DSP (Digital Signal Processing) technologies” [emphasis added]. JDS argues

that the list of five optical performance parameters is meant to be read as a

requirement that a product perform all five measurements at the same time.

The Wavelinq WMU is the only product that can measure all five parameters

simultaneously (thus excluding all other products from the earn-out). 

JDS bases its argument on the plural “s” attached throughout the

definition. Paragraph 1.3 of the Asset Purchase Agreement states that “unless

the context requires otherwise, words importing the singular include the plural

and vice versa . . . .” Because the context does not demand otherwise, we impart

no special meaning to the plural forms. The definition also states that the

products will contain optical performance parameters “such as,” suggesting that

the list is demonstrative and not exhaustive.

The product may incorporate technologies like those listed. The word

“may” suggests that these technologies can be utilized by the products but are

not a necessary component. Additionally, the technologies are not limited to

those listed, so the list is not necessarily exhaustive. JDS argues that because

the listed components, in the listed order, are the core of the Wavelinq monitor

design, they should be construed as being satisfied only by a Wavelinq monitor

or similar design. Nothing in the definition requires that a design include

all—or any—of the three listed components.

A wavelength locker is used in dense WDM transmission systems to

stabilize the wavelength of the light pulses emitted by the lasers. The locker is
No. 05-11359

8

tuned to an individual channel, where it filters and detects a small amount of

the laser light source and provides a stabilizing feedback signal to ensure that

the source continues to emit the proper wavelength. JDS’s product description

for wavelength lockers stated thatit was used in dense WDM systems to monitor

channel frequency and optical power. Channel frequency is a synonym for

channel wavelength, so the device functions as a channel wavelength monitor.

A locker is a one-channel-at-a-time device—if a fiberoptic cable contains

eighty channels, it will require eighty lockers. Narrowband and broadband

lockers are different only in packaging—companies could either purchase all of

the lockers they needed as a broadband locker unit with one product number for

multiple lockers or as a narrowband unit with individual product numbers for

each locker. The lockers were offered in this manner for the ease and choice of

the purchasing company depending on their administrative needs.

JDS did notinclude any locker sales on the earn-out statementit provided

to Wavelinq, arguing that lockers do notfall under the product definition. First,

JDS contends that because an individual locker focuses on a single wavelength,

it could not work with a multichannel signal and therefore does not fall within

the definition. This analysis assumes that a single product must be capable of

monitoring a multichannel signal, yet there is no such requirement in the

definition of “product sales.” The definition merely requires that a product be

used in WDM network applications, and a series of lockers can be combined to

monitor all available wavelengths within a WDM network. 

Second, JDS argues that because lockers were available at the time of the

agreement, they should not be included in the earn-out. Nothing in the

agreement excludes preexisting products. Further, two of the undisputed

products that JDS included in the earn-out statement, OPM and Queensgate,
No. 05-11359

9

existed at the time of the agreement.

Under the product definition, lockers are wavelength monitoring devices

that are employed in WDM network applications. They measure wavelength,

linewidth, and intensity levels. Though they do not contain grating or DSP, they

contain something similar to a photodetector array: each locker contains two

photodetectors, so the combination of the necessary amount of lockers for use in

a WDM network will yield a large number of photodetectors, similar to a

photodetector array. The narrowband and broadband lockers are not explicitly

excluded by the product definition.

JDS also argues thatlasers with integrated monitors do notfall within the

product definition. Its argument is based on the assumption that the definition

is meant to only include Wavelinq’s WMU and similar designs. The integrated

units are dissimilar to the Wavelinq WMU. 

The integrated products are created by packaging a monitor or locker with

a laser or other network application. The laser channel monitor–locker is sold

as a combined unit that provides a monitor or locker to control the laser and is

a type of wavelength monitor. The integrated power monitor–channel monitor

is used to monitor individual transmission channels or laser powers. It is a type

of spectral analysis device because it measures power over channels. Both

integrated products are designed for use in WDM network applications. Each

measures a number of the optical performance parameters. The integrated

products contain the necessary features to possibly fall under the product

definition. 

The agreement defines products through illustrative lists of technologies

and features that are explicitly nonexhaustive. The agreement requires only

that the product either monitor the wavelength, color, and channel of the light
No. 05-11359

6 FED. R. CIV. P. 49(b).

10

or monitor power at wavelengths, be used in WDM network applications, and

provide accurate measurements of optical performance parameters. The district

court did not err in failing to hold, as a matter of law, that the disputed products

were excluded from the earn-out provisions. For the same reason, any error in

submitting to the jury whether the disputed products were “products” under the

Asset Purchase Agreement was harmless as to JDS.

III

Both parties lodge a myriad of complaints concerning the jury’s verdict and

the district court’s subsequent supplemental instructions and resubmission to

the jury; however, neither party objects to the original jury charge. Wavelinq

argues that the district court should have entered judgment on the first verdict

in its favor for $5,000,000. JDS argues that the supplemental instructions

tainted the jury’s deliberations. We conclude that the district court did not err

in resubmitting the case to the jury and that the accompanying supplemental

instructions were not an abuse of discretion. 

A

The practice of resubmission to the jury for clarification when the verdict

is conflicting is well-established. Federal Rule of Civil Procedure 49(b) explicitly

allows a district court to “direct the jury to further consider its answers and

verdict” when the answers to interrogatories are inconsistent with the general

verdict or each other.6 Rule 49(a), which concerns special verdicts, does not

explicitly provide for resubmission to the jury. However, we have held that

special verdicts, such as the one involved in this case, should be treated the same
No. 05-11359

7 Nance v. Gulf Oil Corp., 817 F.2d 1176, 1178 (5th Cir. 1987) (citing Perricone v.

Kansas City S. Ry. Co., 704 F.2d 1376, 1379 (5th Cir. 1983); Guidry v. Kem Mfg. Co., 604 F.2d

320, 321 (5th Cir. 1979); Fugitt v. Jones, 549 F.2d 1001, 1005 (5th Cir. 1977); Morrison v.

Frito-Lay, Inc., 546 F.2d 154, 160-61 & n. 10 (5th Cir. 1977); and Landry v. Offshore Logistics,

Inc., 544 F.2d 757, 761 (5th Cir. 1977)). 

8 See Mateyko v. Felix, 924 F.2d 824, 827 (9th Cir. 1991); Karl v. Burlington N. R.R. Co.,

880 F.2d 68, 72-73 (8th Cir. 1989); Santiago-Negron v. Castro-Davila, 865 F.2d 431, 444 (1st

Cir. 1989); Auwood v. Harry Brandt Booking Office, Inc., 850 F.2d 884, 890-91 (2d Cir. 1988).

But see McCollum v. Stahl, 579 F.2d 869, 871 (4th Cir. 1978) (holding that a resubmission was

an abuse of discretion because “the remand of the questions to the jury was tantamount, in its

effect, to a direction to the jury to find liability in order to warrant the award of damages”). 

9 Mateyko, 924 F.2d at 827.

10 504 F.2d 518, 547 (5th Cir. 1974).

11 Id. at 546.

12 Id.

11

because Rule 49(a) does not prohibit resubmission of inconsistent verdicts and

it has long been the practice of this circuit.7 The majority of circuits agree.8 The

Ninth Circuit noted that it “promotes both fairness and efficiency.”9

In University Computing Co. v.Lykes–Youngstown Corp., we held that “the

trial court had the authority to request the jury to correct its verdict.”10 In that

breach of contract and misappropriation action, the jury awarded punitive

damages for misappropriation and conversion but did not award actual damages

on those counts.11 The defendants argued that because the jury did not award

any actual damages, the initial verdict amounted to a finding of no injury with

respectto those counts.12 In rejecting that argument, we noted that although the

problem has “arisen infrequently,” courts have generally held that “a trial court

may order a jury to continue its deliberation if the verdict is contrary to the
No. 05-11359

13 Id. at 547 (citing Alston v. West, 340 F.2d 856 (7th Cir. 1965) and Grober v. Capital

Transit Co., 119 F. Supp. 100 (D.D.C. 1954)).

14 Id. (citing Wells Truckways, Ltd. v. Burch, 247 F.2d 194 (10th Cir. 1957)).

15 636 F.2d 945, 963-64 (5th Cir. 1981).

16 See, e.g., Geosearch, Inc. v. Howell Petroleum Corp., 819 F.2d 521, 528 (5th Cir. 1987)

(district court allowed recovery of the full damage award where the jury awarded 55% of

uncontested damages against a defendant who was found 45% negligent).

17 Id. at 527 (citing FED. R. CIV. P. 60(a); Atlantic & Gulf Stevedores, Inc. v. Ellerman

Lines, Ltd., 369 U.S. 355, 364 (1962); and Mercer v. Long Mfg. N.C., Inc., 665 F.2d 61, 65 (5th

Cir. 1982)).

12

court’s instructions”13 or “if the jury returns two inconsistent verdicts.”14

Wavelinq argues that resubmission was neither appropriate nor necessary

because it was clear that the jury’s intent was to award $5,000,000. Wavelinq

contends that the district court should have reapportioned the damages among

the three categories such that Wavelinq was awarded $5,000,000. Wavelinq

cites a number of authorities where the district court corrected inconsistent

answers to special interrogatories, but Wavelinq’s authorities are clearly

distinguishable. In G.A. Thompson & Co. v. Partridge, a district court entered

judgment for approximately $120,000 against four defendants jointly and

severally when a jury mistakenly awarded approximately $30,000 against each

of the defendants.15 Other situations with courts altering verdicts generally

occur when the jury reduces a damage award based on negligence attributed to

the liable party.16 We have recognized that the district court “may correct

clerical errors in a verdict and must harmonize apparently conflicting verdicts.”17

However, none of these cases permitted a district court to adjust the allocation

among different damage categories as Wavelinq argues the district court should

have done here.
No. 05-11359

18 Farrar v. Cain, 756 F.2d 1148, 1150 (5th Cir. 1985).

19 Nat’l Hispanic Circus, Inc. v. Rex Trucking, Inc., 414 F.3d 546, 550 (5th Cir. 2005).

20 Id. (citing United States v. Dien Duc Huynh, 246 F.3d 734, 738 (5th Cir. 2001)).

13

More importantly, the district court recognized the jury’s confusion when

it awarded $5,000,000 in a category in which the parties agreed the maximum

amount was $897,773. The district court gave supplemental instructions with

an explanation of how to allocate the damages based on each party’s arguments

and damage models. The district court did not err in refusing to enter the first

verdict and resubmitting the matter to the jury for further consideration.

B

JDS challenges the district court’s supplemental jury instructions.

Because neither party objected to the original jury charge in district court,

appellate review is precluded “unless the error is so fundamental as to result in

a miscarriage of justice.”18 As JDS objected to the supplemental instructions, our

review of the supplemental instructions is for abuse of discretion.19 “A district

court does not abuse its discretion if its instructions, as a whole, state the law

correctly and instruct the jury properly on the legal principles to be applied to

the facts that they will decide.”20

The district court discussed the jury’s initial verdict, stating there were

two logical ways to read it. The jury could have agreed with JDS concerning

Wavelinq’s failure to prove damages for disputed and undisputed products and

intended to award no damages in those categories to Wavelinq. The other

possibility was that the jury decided Wavelinq proved its case and intended to

award the full $5,000,000 under the damage caps. The district court instructed

the jury that if this was the case, the damages would need to be allocated among
No. 05-11359

21 724 F.2d 500, 505-06 (5th Cir. 1984). 

22 Id. at 506.

23 Id. 

24 Id.

14

the three categories. The district court specifically pointed the jury to

Wavelinq’s damage model and the exhibit that showed the maximum award

recoverable for the category covering the earn-out statements. The district court

stated thatto stay within the $5,000,000 cap,the jury might consider calculating

the amounts for undisputed products and earn-out statements, subtracting that

number from $5,000,000, and placing the remainder in the disputed products

category. The district court explicitly told the jury that “I am not trying to push

you in one direction or the other” and that the district court wanted the verdict

to be the jury’s own.

JDS cites Belton v. Fibreboard Corp., in which we held that the judge

invaded the jury’s fact-finding function with instructions expressing opinions on

damages and encouraging a specific verdict.21In Belton, a jury returned an

initial verdict, butthe district courttold them that because the other defendants

had settled with the plaintiffs, they would have to make the damage award

higher if the plaintiffs were to recover from the nonsettling defendant.22 The

district court asked:“I presume this is the amount that you feel that they should

recover from the defendant; is that correct?”23 We deemed this to be an

inappropriate comment on the factual issue of damages.24 The jury then

returned a second verdict, but that verdict still would not have allowed the

plaintiffs to recover the full amount the jury had stated in the first verdict when

they were under the impression that the plaintiffs’ settlement with the other
No. 05-11359

25 Id. at 503.

26 Id. at 503-04.

27 Id. at 506.

28 Id. at 505-06 (citing Quercia v. United States, 289 U.S. 466, 470 (1933) and

McCullough v. Beech Aircraft Corp., 587 F.2d 754, 761 (5th Cir. 1979)).

29 Id. at 506 (citing FED. R. CIV. P. 49(b); Univ. Computing Co. v. Lykes–Youngstown

Corp., 504 F.2d 518, 547 (5th Cir. 1974); and Stewart v. Atl. Pipe Line Co., 470 F.2d 738 (5th

Cir. 1972), modified, 479 F.2d 311 (5th Cir. 1973)).

15

defendants would not be deducted.25 At this point, the district court told the jury

the amounts of the previous settlements and instructed them to deliberate

further.26 We reversed because it was “clear that the verdict upon which the

judgment appealed from was entered did not representthe views of an impartial

jury.”27

However, in Belton, we noted that a district “judge has the right to

comment on the evidence, but may not comment on the ultimate factual issues

to be decided.”28 Relying on University Computing Co. v. Lykes–Youngstown

Corp., we noted that when the district court received the first verdict and

concluded that the jury did not understand the charge, the district court would

have been “free to ask the jury members whether their verdict was intended to

reflect the total amount of the plaintiffs’ damages, to reinstruct them, and to

allow them to deliberate further.”29In the present case, the district court’s

supplemental instructions were significantly more evenhanded than in Belton.

The district court presented both plausible explanations for the jury’s first

verdict and instructed them how to clarify their intent to ensure that they

understood the initial charge. The district court also was careful to explain how

the jury might use the evidence without commenting on its weight. 
No. 05-11359

30 Univ. Computing Co., 504 F.2d at 547.

31 Id.

32 340 F.2d 856, 858 (7th Cir. 1965).

33 Id. at 857.

34 Id. at 858.

16

The district court’s supplemental instructions are in line with situations

in which a court of appeals has affirmed a district court’s supplemental

instructions upon resubmission of a verdict. In University Computing Co. v.

Lykes–Youngstown Corp.,the district court reminded the jury thatif it was their

intention to find that the plaintiff was not damaged with respect those counts

where the jury had awarded punitive but not actual damages, then the jury only

needed to return a verdict for the defendants.30 We approved of those

supplemental instructions because they “clearly and properly notif[ied] the jury

of its options without making any attemptto sway the jury in its deliberations.”31

Likewise, in Alston v. West, the Seventh Circuit concluded that a district court

did not coerce the verdict where the court resubmitted a verdict because the

jury’s first verdict failed to follow the court’s instructions.32 In the first verdict,

the jury found the owner ofthe automobile that caused an accidentliable but not

the agent who actually drove the car despite an explicit instruction by the

district courtthat such a verdict was not legitimate.33 Because the district court

made “it plain to the jury that they were the sole judges of the facts,” the

Seventh Circuit concluded that the district court acted within it discretion.34 In

the present case, the district court made it clear that the jury was the sole judge

of the facts by twice telling the jury that they could simply return their first

verdict if that was their intent. Given this record, the district court did not
No. 05-11359

35 Belton v. Fibreboard Corp., 724 F.2d 500, 505 (5th Cir. 1984).

17

coerce a certain verdict.

JDS complains that the trial court pointed out Wavelinq’s exhibits and

damage model to the jury when discussing how it might choose to allocate the

$5,000,000. But JDS fails to note that this instruction was given in the context

of what the jury should do if they found JDS liable and agreed with Wavelinq’s

presentation. Inherent in these comments is that these exhibits might be useful

if the jury agreed with Wavelinq. The district court was merely commenting on

the evidence, which is permissible.35 Accordingly, the district court did not abuse

its discretion in giving the supplemental instructions.

IV

Both JDS and Wavelinq appeal the district court’s decision to award

Wavelinq $897,773 for the earn-out category. In the second verdict, the jury had

awarded $2,750,000 for this category. The district court reduced this amount by

granting judgment as a matter of law.

A

JDS contends that the earn-out agreement does not require JDS to pay

Wavelinq any earn-out amount during the pendency of the lawsuit. Although

JDS conceded that it owed $897,773 under the initial earn-out statement, JDS

moved for summary judgment arguing that no payment was due until the

lawsuit concluded. JDS now argues that the district court improperly submitted

the question of the earn-out statement to the jury and should have granted its

summary judgment motion to not require payment until the lawsuit’s conclusion.

We review the denial of JDS’s summary judgment motion on the earn-out
No. 05-11359

36 Coleman v. Houston Indep. Sch. Dist., 113 F.3d 528, 533 (5th Cir. 1997).

37 Anthony v. Chevron USA, Inc., 284 F.3d 578, 583 (5th Cir. 2002).

38 FED. R. CIV. P. 50(a).

18

statements de novo.

36

Under the earn-out provision of the agreement, JDS was required to

provide Wavelinq with a reasonably detailed earn-out statement within thirty

days after the end of each year. Wavelinq then had fifteen days to object to the

statement. If Wavelinq failed to object, the earn-out statement was accepted,

and JDS was required to pay Wavelinq within five business days. JDS argues

that because Wavelinq objected to the earn-out statement, the five-day period

has not yet expired such that the jury should not have been presented with a

question about these statements.

JDS contends that “an unambiguous contract term says that payment is

not required while a dispute is pending.” The contract does not contain such a

provision—the only relevant provision states when payment is due without

objection. The district court did not err by denying JDS’s summary judgment

motion.

B

Wavelinq argues that the district court improperly granted JDS’s motion

for judgment as a matter of law to reduce the recovery under the verdict for the

earn-out category. We review a district court’s denial for judgment as a matter

of law de novo,

37 finding judgment as a matter of law appropriate when “a party

has been fully heard on an issue . . . [and] a reasonable jury would not have a

legally sufficient evidentiary basis to find for the party on that issue.”38

Wavelinq again argues that the jury intended to award Wavelinq
No. 05-11359

19

$5,000,000 and asserts that the jury’s intent should trump all other

considerations. It is elementary that a verdict must be supported by the

evidence, and in this case, the evidence, in addition to the parties’ agreement,

limited the maximum recovery to $897,773.

V

JDS argues that the evidence is insufficient to support the jury’s second

verdict, contending that the damage awards have no relation to Wavelinq’s

damage model. JDS also faults Wavelinq’s damage model because it divided the

statements into a year-by-year format rather than a claim-by-claim format that

would comport with the jury instructions. JDS fails to note that within each

year, the models have breakdowns for each type of product, allowing the jury to

convert from a year-based calculation to a claim-based calculation. 

JDS argues that the line items in the damage model do not comport with

the jury’s exact awards. For example, the jury awarded 36.44% of disputed

product claims and 90.25% of undisputed product claims that Wavelinq sought

to prove. Wavelinq retorts that the jury reduced the award in the disputed

products category significantly to keep the overall award under the $5,000,000

cap, as instructed by the district court. It is possible under this theory that the

jury found that Wavelinq proved damages in excess of the $1,500,000 for

disputed products but simply allocated the remaining portion of the $5,000,000

to this blank after calculating the undisputed product and earn-out statement

damages. The district court’s supplemental instructions suggested this approach

to the jury should they find for Wavelinq.

The record is not so devoid of evidence that a reasonable person could not

reach the jury’s findings. The confusion seemingly resulted from the jury being
No. 05-11359

20

instructed to operate under a $5,000,000 cap. Though the verdict may not

exactly correspond with Wavelinq’s damage model, Wavelinq’s model was not

restricted by the $5,000,000 cap. With the jury operating under the caps, the

verdict is sufficiently based on evidence adduced at trial even though it does not

exactly correspond with the Wavelinq model.

JDS also contends that Wavelinq’s models are flawed due to improper

calculations. Specifically, the returns and discounts subtracted from gross sales

were supposed to be determined according to Generally Accepted Accounting

Practices (GAAP). We reject this argument because there were no applicable

GAAP on the issue of returns and discounts. 

JDS also asserts that Wavelinq failed to subtract returned products from

the gross sales on their damage model. The record reflects factual disputes,

which were for the jury to resolve.

JDS also disputes the additional sales that Wavelinq sought to prove for

the undisputed products. JDS complains that Wavelinq did not provide an

actual invoice to prove that the unreported sales occurred. Not only did

Wavelinq provide documents to support the unreported sales, but Seago also

testified at length and in detail of his personal knowledge about these sales. 

Accordingly, we conclude that the evidence adduced at trial was sufficient

to support the second verdict.

VI

Finally, JDS contends that the trial court incorrectly applied the Texas

prejudgment interest rate instead of the lower Ontario rate after determining

that JDS failed to give adequate notice of reliance on foreign law on this issue.
No. 05-11359

39 R.R. Mgmt. Co. v. CFS La. Midstream Co., 428 F.3d 214, 221-22 (5th Cir. 2005).

40 Hall v. White, Getgey, Meyer Co., LPA, 465 F.3d 587, 595 (5th Cir. 2006) (quoting

Canal Ins. Co. v. First Gen. Ins. Co., 901 F.2d 45, 47 (5th Cir. 1990)).

41 FED. R. CIV. P. 44.1 advisory committee’s note.

42 See Frietsch v. Refco, Inc., 56 F.3d 825, 828 (7th Cir. 1995); Thyssen Steel Co. v. M/V

Kavo Yerakas, 911 F. Supp. 263, 267 (S.D. Tex. 1996).

21

We review the district court’s decision on choice of law questions de novo.39

“Issues regarding pre-judgment interest in a diversity case ‘are governed by

applicable state law.’”40 As we have noted earlier, Texas would honor the parties’

choice of Ontario law.

Federal Rule of Civil Procedure 44.1 requires that a party “who intends to

raise an issue about a foreign country’s law must give notice by a pleading or

other writing.” In considering the reasonableness of notice, the court should

weigh “[t]he stage which the case had reached at the time of the notice, the

reason proffered by the party for his failure to give earlier notice, and the

importance to the case as a whole of the issue of foreign law sought to be

raised.”41

JDS asserted from the beginning of the litigation that Ontario law applies

to all substantive contract issues, as stipulated in the Asset Purchase

Agreement. In multiple briefs and orders, JDS quoted the choice of law clause.

However, JDS did not raise Ontario law for the specific issue of prejudgment

interest until after the final judgment was entered.

Wavelinq argues that JDS has waived its right to address foreign law by

waiting to provide notice on the prejudgment interest question until after the

final judgment was entered. Wavelinq cites two cases to support its waiver

argument, but in both the party failed to give notice of any foreign law issue.42
No. 05-11359

43 Court of Justice Act § 128(1), R.S.O. 1990, c. C.43 s. 128 (Can.).

44 Dunlaw Life Ins. Agency Ltd. v. Citadel Life Assurance Co., [2003] O.J. No. 4969,

¶ 10.

45 Court of Justice Act § 130, R.S.O. 1990, c. C.43 s. 130 (Can.).

22

Because JDS referred to Ontario law since the beginning of the lawsuit, it did

not waive its foreign law arguments. 

Under Ontario law, prejudgment interest begins accruing the date the

cause of action arose and continues to the date ofthe order.43 Ontario courts will

average the rates over the relevant time period so that recovery is more

accurate.44 Wavelinq argues that Ontario law provides broad discretion to

determine the interest rate. The Courts of Justice Act provides Ontario courts

with broad discretion in determining the amount of prejudgment interest to be

awarded.45 Citing differences in the currency and economy, Wavelinq argues

that these factors weigh heavily in favor of concluding that an Ontario court

would apply the Texas prejudgment interest rate. 

Since the parties contracted to use Ontario law, it should govern the

prejudgmentinterest rate. Accordingly, we reverse the district court’s judgment

to the extent it applied Texas prejudgment interest, and we remand so that

Ontario prejudgment interest law can be applied.

* * *

For the foregoing reasons, we AFFIRM the judgment of the district court

in part; REVERSE in part; and REMAND the cause for further proceedings.

Each party shall bear its own costs of this appeal.