16

‐ 207

‐ cv(L)

E.J. Brooks Co. v. Cambridge Sec. Seals

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT.

CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS

PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE

PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A

SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY

MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE

(WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING TO A

SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT

REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second Circuit, 1

held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the 2

City of New York, on the 3 rd day of July, two thousand eighteen. 3

4

PRESENT: AMALYA L. KEARSE, 5

RAYMOND J. LOHIER, JR., 6

CHRISTOPHER F. DRONEY, 7

Circuit Judges

. 8

‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐ 9

10

E.J. BROOKS COMPANY, d/b/a TYDENBROOKS, 11

12 Plaintiff–Counter

‐ Defendant– 13 Appellant–Cross

‐ Appellee

, 14

15

v. Nos. 16

‐ 207

‐ cv(L), 16

16

‐ 259

‐ cv(XAP) 17

CAMBRIDGE SECURITY SEALS, 18

19 Defendant–Counter

‐ Claimant– 20 Appellee–Cross

‐ Appellant

. 21

22

‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ‐‐‐‐ 23

24

FOR PLAINTIFF–COUNTER

‐ 25

DEFENDANT–APPELLANT– 26

CROSS

‐ APPELLEE: 272 D ANIEL G OLDMAN (Kerri Ann Law, 1

Claudia Pak, Sam Koch, on the brief ), 2

Kramer Levin Naftalis & Frankel 3

LLP, New York, NY. 4

5

FOR DEFENDANT–COUNTER

‐ 6

CLAIMANT–APPELLEE–CROSS

‐ 7

APPELLANT: H OWARD S CHUB (Daniel J. Fetterman, 8

on the brief ), Kasowitz, Benson, Torres 9

& Friedman LLP, New York, NY. 10

11

Appeal from a judgment of the United States District Court for the 12

Southern District of New York (Loretta A. Preska, then Chief Judge ). 13

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, 14

AND DECREED that the judgment of the District Court is VACATED as to 15

damages, and the case is REMANDED for further proceedings. 16

Plaintiff E.J. Brooks Company, d/b/a TydenBrooks (“TydenBrooks”) and 17

defendant Cambridge Security Seals (“CSS”) cross

‐ appeal following a jury trial at 18

which TydenBrooks largely prevailed. We assume the parties’ familiarity with 19

the facts and record of the prior proceedings, as set forth in our prior decision in 20

E.J. Brooks Co. v. Cambridge Security Seals, 858 F.3d 744 (2d Cir. 2017), to which 21

we refer only as necessary to explain our decision to vacate the judgment as to 22

damages and remand the case to the District Court for further proceedings. 23

On appeal, the parties disputed whether TydenBrooks’s damages on its 24

misappropriation of trade secrets, unfair competition, and unjust enrichment 253 claims under New York law could be calculated based on CSS’s avoided costs. 1

They also disputed whether, assuming that avoided costs are a permissible 2

measure of damages, prejudgment interest under § 5001(a) of the New York Civil 3

Practice Law and Rules is mandatory. Because these disputes implicated 4

important, unsettled questions of New York law, we certified to the New York 5

Court of Appeals the following questions relating to damages: 6

1. Whether, under New York law, a plaintiff asserting claims of 7

misappropriation of a trade secret, unfair competition, and unjust 8

enrichment can recover damages that are measured by the costs the 9

defendant avoided due to its unlawful activity. 10

11

2. If the answer to the first question is “yes,” whether prejudgment 12

interest under New York Civil Practice Law and Rules § 5001(a) is 13

mandatory where a plaintiff recovers damages as measured by the 14

defendant’s avoided costs. 15

16

E.J. Brooks, 858 F.3d at 752. Concluding that CSS’s remaining challenges not 17

encompassed by the certified questions were without merit, we affirmed the 18

District Court’s judgment as to liability. Id. at 746 & n.2. 19

In an opinion filed on May 3, 2018, the New York Court of Appeals 20

answered the first certified question in the negative. The court held that 21

“compensatory damages must return the plaintiff, as nearly as possible, to the 22

position it would have been in had the wrongdoing not occurred—but do no 234 more.” E.J. Brooks Co. v. Cambridge Sec. Seals, No. 26, slip op. at 2 (N.Y. May 3, 1

2018). Having answered the first certified question in the negative, the New 2

York Court of Appeals did not reach the second. Id. at 2 n.1. 3

The New York Court of Appeals’s answer to our first certified question 4

requires that we vacate the District Court’s judgment as to damages and remand 5

the case for further proceedings. Among other things, on remand the District 6

Court may consider whether TydenBrooks has waived any claim for damages 7

under any theory other than avoided costs. 8

For the foregoing reasons, the judgment of the District Court is VACATED 9

as to damages, and the case is REMANDED for further proceedings consistent 10

with the opinion of the New York Court of Appeals and this order. We thank the 11

New York Court of Appeals for its assistance in resolving an unsettled question 12

of New York law. 13

FOR THE COURT: 14

Catherine O’Hagan Wolfe, Clerk of Court 15