Opinion ID: 4511116
Heading Depth: 2
Heading Rank: 1

Heading: Kodak's Attacks on District Court Rulings

Text: 1. Kodak's Argument that ITyX Lacked Standing to Bring the Suit Is Meritless Kodak argues that ITyX does not have Article III standing, and so the district court erred by not granting summary judgment or judgment as a matter of law in Kodak's favor, and erred by deferring its decision on standing until after the jury decided material, disputed facts about the meaning of the contract. Kodak argues that ITyX did not own or have the distribution rights to the IDR software and so could not grant a license to Kodak, as required by the Warranty of Title section in the Master Agreement. In consequence, Kodak contends, ITyX could not enforce the Master Agreement and so, in its view, it follows that ITyX lacked standing. Kodak is wrong for several reasons. Standing requires that a plaintiff satisfy three elements: injury in fact, traceability, and redressability. - 14 - Kerin v. Titeflex Corp., 770 F.3d 978, 981 (1st Cir. 2014) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992)). ITyX's complaint alleged the existence of contracts to which it was a party, and a concomitant breach, and damages. ITyX was a party to the contract. That Kodak defends, on the grounds that it believed ITyX breached the Warranty provision and that the contract did not afford ITyX a right to enforce it, does not create an issue of Article III standing. Kodak does not cite any cases that a defense that a party to a contract has violated a provision of that contract precludes Article III standing. The only standing cases Kodak cites involve very different facts, in which non-parties sought to sue on contracts as third-party beneficiaries. See Miree v. DeKalb Cty., 433 U.S 25, 29 (1977) (The relevant inquiry is a narrow one: whether petitioners as third-party beneficiaries of the contracts have standing to sue respondent.); AT&T Mobility, LLC v. Nat'l Ass'n for Stock Car Auto Racing, Inc., 494 F.3d 1356, 1359–61 (11th Cir. 2007) (deciding whether a non-party had suffered an injury in fact by looking to whether it had a legally protected interest that was invaded). ITyX is not a non-party. Traceability requires 'a causal connection' . . . between the injury and the challenged conduct. Belsito Commc'ns, Inc. v. Decker, 845 F.3d 13, 21 (1st Cir. 2016) (quoting Lujan, 504 U.S. at 560–61)). Here, the evidence adequately supported - 15 - ITyX's allegation that Kodak discontinued contractual payments and reentered the IDR market which caused ITyX financial injury. Redressability requires that the injury will likely be redressed by a favorable decision. Id. (alteration and quotation marks omitted) (quoting Lujan, 504 U.S. at 560–61)). Money damages redress the economic injury ITyX alleged, and so this prong is met. See 24 Richard A. Lord, Williston on Contracts § 64:1 (4th ed. 2019) (The primary if not the only remedy for injuries caused by the nonperformance of most contracts is an action for damages for the breach . . . .). ITyX plainly had Article III standing to bring this suit. 2. We Reject Kodak's Appellate Arguments About the PS Agreements' Minimum Duration Kodak argues that the district court also erred in holding that the PS Agreements remained in effect for two years after inception, that is, until at least June 1, 2017. This argument is both waived and meritless. In its Rule 50(a) motion, Kodak did not object to the district court's summary judgment conclusion that the PS Agreements had a minimum term of twenty-four months. Kodak has waived this argument. At most, Kodak made the different argument that ITyX could not show damages and no damages existed. That different argument concerned the sufficiency of evidence of damages, not the district court's interpretation of the PS - 16 - Agreement. See Ji v. Bose Corp., 626 F.3d 116, 127-28 (1st Cir. 2010). Even assuming dubitante that Kodak preserved this argument, the argument still fails. The PS Agreements remained in effect until at least June 1, 2017. The PS Agreements state that [t]he [PS] [A]greement has a minimum term of 24 months and is automatically renewable for another year unless a cancellation notice is given. The cancellation language on which Kodak's argument turns does not alter the contracts' plain language as to the minimum term. B. Kodak's Attacks on the Jury Verdict and Denial of Judgment as a Matter of Law To prove a breach of contract claim under New York law, a party must show: [1] formation of a contract, [2] performance by one party, [3] failure to perform by another, and [4] resulting damage. N.Y. State Workers' Comp. Bd. v. SGRisk, LLC, 983 N.Y.S.2d 642, 648 (App. Div. 2014). Kodak contends that ITyX did not sufficiently show breach under either the Master or PS Agreements and that the jury verdict is inconsistent. 1. Kodak Misunderstands the Jury's Findings of Breach of Contract as to the Master Agreement Kodak argues that the district court erred in denying its motion for judgment as a matter of law because Kodak reads the jury finding that Kodak did not breach by terminating [the Master - 17 - and/or PS Agreements] on December 18, 2015 to mean that Kodak validly terminated the Agreements in December 2015.5 First, this argument is forfeited, as Kodak did not raise a claim of inconsistency before the [district] court discharged the jury. Correia v. Fitzgerald, 354 F.3d 47, 56–57 (1st Cir. 2003). Second, Kodak's argument, even if preserved, reads too much into this finding. This jury finding non-breach in this respect does not contradict the jury finding that Kodak breached by a different action and/or on some other date. The jury found that Kodak had reentered the IDR business within two years of purporting to abandon the business and that Kodak had breached the PS Agreements. Such reentry is a different breach of the Master Agreement. The jury then awarded damages to ITyX (and no damages to Kodak). Where there is a view of the case that makes the jury's answers to special interrogatories consistent, they must be resolved that way. Atlantic & Gulf Stevedores, Inc. v. Ellerman Lines, Ltd., 369 U.S. 355, 364 (1962). Here, that view is that Kodak, through reentry within two years, breached the Master Agreement, Kodak breached the PS Agreements, and ITyX did not breach the terms of these Agreements, including the implied 5 We do not address Kodak's arguments that are premised on the notion that the jury found it had breached the Master Agreement by terminating the contract. The jury found that Kodak did not so breach the Master Agreement. - 18 - covenant of good faith and fair dealing. The jury's findings are internally consistent, and sufficient evidence supports its finding that Kodak breached the Master Agreement and PS Agreements, but did not do so by purporting to terminate the Agreements on December 18, 2015. Next, Kodak argues both that the damages awarded were speculative and lacked evidentiary support. Both arguments lack merit. As to its speculative damages argument, Kodak asserts that ITyX improperly calculated damages by factoring in the sales figures of products they argue were irrelevant, and the jury impermissibly relied on these product calculations. ITyX presented evidence of its calculation of its damages under the Master Agreement as forty percent of Kodak's AIM Platform sales. The evidence was that the AIM Platform sales were a reasonable proxy for the sales the Kodak Product would have accrued but for Kodak's breach, of which forty percent belonged to ITyX under the Master Agreement. Kodak's argument takes two forms: (1) that the jury could rely only on figures related to the Kodak Product's sales; and (2) that the AIM Platform figures include the sales of products the district court had held not to compete with the Kodak Product. Kodak's first argument, that the jury could not rely on the sales figures of the AIM platform, misreads the applicable - 19 - law. Kodak relies on the rule that [d]amages awarded for a breach of contract must be 'specific to those goods for which the parties had contracted.' Mongiello's Italian Cheese Specialties, Inc. v. Euro Foods Inc., No. 14-cv-2902 (DF), 2018 WL 4278284, at  (S.D.N.Y. Mar. 30, 2018) (quoting David v. Glemby Co., 717 F. Supp. 162, 170 (S.D.N.Y. 1989)). Because the jury awarded damages for the Kodak Product revenues ITyX lost as a result of the breach, and not for some other ITyX product, the award complied with the rule. Next, Kodak argues that the AIM Platform sales figures comprised revenues from products that would not compete with the Kodak Product and that the AIM Platform was not analogous to the Kodak Product because it was sold to different customers, in a different market, in a different geographic area, and under a different price structure. Nothing compelled the jury to accept this view or to reach a different damages sum. Under New York law, the non-breaching party need only provide a 'stable foundation for a reasonable estimate [of damages]' before an award of general damages can be made. Tractebel Energy Mktg., Inc. v. AEP Power Mktg., Inc., 487 F.3d 89, 110–11 (2d Cir. 2007) (alteration in original) (quoting Freund v. Wash. Square Press, Inc., 314 N.E.2d 419, 421 (N.Y. 1974)). Here, ITyX did just that by providing the sales figures of the product that Kodak marketed in place of ITyX's. That Kodak can - 20 - point to factors which tend to show that the estimate was too high (just as ITyX can point to factors suggesting it was too low) does not violate New York's stable foundation rule. Under New York law, only the existence, not the amount, of general damages must be reasonably certain to prove a breach of contract claim. Id. at 110 (quoting Wakeman v. Wheeler & Wilson Mfg. Co., 4 N.E. 264, 266 (N.Y. 1886)). 2. Kodak's Attack Fails as to the Jury's Finding of Breach of Contract as to the PS Agreements Kodak first argues that, following Kodak's December 2015 purported termination, ITyX failed to perform its contractual obligations under the PS Agreements and so could not prove it had met the performance element. Specifically, Kodak contends that ITyX stopped identifying which employees provided services related to the Kodak Product, issuing relevant invoices, and refunding from each invoice the amount allocated to employees on Kodak's payroll. These actions, Kodak argues, were conditions precedent to Kodak making quarterly payments under the PS Agreements. In response, ITyX argues the PS Agreement obliged it to maintain capacity and, by doing so, ITyX performed. This was a matter for the jury to resolve. The jury heard testimony and saw evidence supporting both Kodak's and ITyX's arguments as to such performance and the alleged breach of the PS Agreements. The jury expressly found - 21 - that Kodak breached the PS Agreements by not making these payments and that ITyX had not breached the PS Agreements. The jury had an adequate evidentiary basis for its verdict and its verdict was rational.6 Kodak next argues that ITyX failed to prove damages incurred by any alleged breach of the PS Agreement. This too was an issue for the jury, and its conclusion is both supported and rational. ITyX provided witness testimony about the manner of calculating its costs of maintaining capacity under the PS Agreements, and explaining the PS Agreements, which provide a table of the quarterly payments Kodak was obligated to make. Kodak's argument fails.7 6 While we have addressed Kodak's argument on the merits, Kodak seems to have waived this performance argument by not raising it in its Rule 50(a) motion. Kodak argued that, because there[] [was] no list of the people who were on the ITyX Solutions payroll who [were] doing any work[,] . . . [ITyX] [could not] prove damages. This preserves Kodak's argument as to the damages element, but not as to the performance element, i.e., ITyX's purported non-performance of the PS Agreements. 7 Employing the same arguments, Kodak appeals the district court's denial of Kodak's motion to amend the district court's declaratory judgments to hold that the Master Agreement was terminated on December 18, 2015, and so Kodak did not breach any contract. The declaratory judgments are consistent with, and nearly identical to, the jury verdict. The district court clearly did not abuse its discretion. - 22 - 3. Prejudgment Interest on the Damages Under the Master Agreement Should Be Computed from January 1, 2017 The district court calculated a prejudgment interest award of $1,745,654.20 at the New York prescribed rate of nine percent. See N.Y. C.P.L.R. § 5004; see also Analysis Grp., Inc. v. Cent. Fla. Invs., Inc., 629 F.3d 18, 24 (1st Cir. 2010) (stating that substantive state law governs the prejudgment interest award in diversity actions). The district court calculated the prejudgment interest on the $872,529 in damages awarded for breach of the Master Agreement from the date the complaint was filed.8 Kodak appeals only the date used for computation of damages under the Master Agreement. Under New York Law, [t]he date from which interest is to be computed shall be specified in the verdict, report or decision. If a jury is discharged without specifying the date, the court upon motion shall fix the date, except that where the date is certain and not in dispute, the date may be fixed by the clerk of the court upon affidavit. The amount of interest shall be computed by the clerk of the court, to the date the verdict was rendered or the report or decision was made, and included in the total sum awarded. N.Y. C.P.L.R. § 5001(c). Because the jury did not fix the date, the district court was thus authorized on motion to fix the date. Id. The parties offered two potential dates: Kodak argued for 8 The district court calculated the prejudgment interest on the separate breach of the PS Agreement from the date each missed payment was due. - 23 - January 1, 2017, the beginning of the first year of AIM Platform sales. ITyX argued for the date of the filing of the complaint, February 15, 2016. The district court chose the earlier date of filing, but gave no statement of reasons. Under New York law, the date chosen depends on there being both a breach and damages. See N.Y. C.P.L.R. § 5001(b) (Interest shall be computed from the earliest ascertainable date the cause of action existed, except that interest upon damages incurred thereafter shall be computed from the date incurred.); N.Y. State Workers' Comp. Bd., 983 N.Y.S.2d at 648 (discussing the elements for contract breach cause of action); see also Gelco Builders & Burjay Contr. Corp. v. Simpson Factors Corp., 301 N.Y.S.2d 728, 730-31 (Sup. Ct. 1969) (requiring proof of damages on the date from which prejudgment interest runs). The jury verdict here, for breach of the Master Agreement, awarded damages equivalent to the licensing fees owed for the breach. Kodak argues that, because such damages were for license fees, the proper date for the running of interest is January 1, 2017, as Kodak did not make any new sales for which it would have owed fees before this date. We think Kodak's position is the correct one under New York law, for the reasons stated above.9 9 Kodak did not argue that the damages occurred at various times and so should be computed from a single reasonable intermediate date. N.Y. C.P.L.R. § 5001(b). - 24 - We vacate the award of prejudgment interest on the $872,529 in damages under the Master Agreement, and remand with instructions to calculate prejudgment interest from January 1, 2017. C. The District Court Did Not Abuse Its Discretion in Denying Kodak's Motion for a New Trial Kodak presents three arguments that the district court abused its discretion in denying Kodak's motion for a new trial: (1) the verdict was against the great weight of the evidence; (2) the verdict form confused the jury; and (3) misconduct by ITyX's trial counsel tainted the proceedings. We address each argument in turn. The verdict was most certainly not against the great weight of the evidence, nor was the verdict an injustice to Kodak. Although the district court has a much broader power to grant new trial than judgment as a matter of law, it 'cannot displace a jury's verdict merely because [it] disagrees with it' or because 'a contrary verdict may have been equally . . . supportable.' Jennings v. Jones, 587 F.3d 430, 436 (1st Cir. 2009) (second alteration in original) (quoting Ahern v. Scholz, 85 F.3d 774, 780 (1st Cir. 1996)). A district court may independently weigh the evidence, but can only order a new trial when the verdict is against the weight of the evidence or when a new trial is necessary to prevent injustice. Id. Kodak here offers substantially the - 25 - same arguments we have already rejected and so we cannot say there was any abuse of discretion. Next, Kodak argues that the verdict form confused the jury, rehashing its argument that the jury must have been confused because it found that Kodak did not breach the Master Agreement but nonetheless assessed damages for that breach. At oral argument, Kodak offered a new variation of its jury confusion argument: that the district court and parties agreed that, if the jury found that Kodak did not breach by terminating [the Master and/or PS Agreements] on December 18, 2015, then Kodak validly terminated the Master Agreement on that date, so the Exit Provision would no longer have any force. We earlier rejected these inconsistency arguments as forfeited under Correia, 354 F.3d at 56–57, and meritless under Atlantic & Gulf Stevedores, Inc., 369 U.S. at 364, and do so again here in response to the argument. Moreover, Kodak did not sufficiently develop the latter jury confusion argument on appeal, and so it is doubly waived.10 United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990). To the extent this is a belated attack on the verdict form or the jury instructions, the arguments are 10 In its appellate briefing, Kodak merely states its view that the parties and district court had agreed in a colloquy outside the presence of the jury that an answer in the negative to Question 2 meant that the Master Agreement was validly terminated and the Exit Provision ceased to have effect. - 26 - waived. Kodak objected to neither. See Kavanaugh v. Greenlee Tool Co., 944 F.2d 7, 11 (1st Cir. 1991); Moore v. Murphy, 47 F.3d 8, 11 (1st Cir. 1995). Finally, Kodak argues that purported misconduct by ITyX's counsel tainted the proceedings and warrants a new trial. The purported misconduct, as Kodak would have it, is that the plaintiff's counsel made efforts to portray ITyX as David against Kodak as Goliath. Counsel for ITyX referenced the relative sizes of the parties on two occasions: (1) it elicited testimony on Kodak's revenues; and (2) ITyX, in its closing, characterized Kodak as a large company taking advantage of a smaller company. Even if these comments were inappropriate, and we do not say they were, the court's instructions clearly offset any such suggestions, stating: You should consider and decide this case as a dispute between persons of equal standing in the community, of equal worth, and holding the same or similar stations in life. A corporation is entitled to [a] . . . fair trial . . . regardless of its absolute size or its size relative to any other party in the case. And nothing in the jury's verdict leads even to a suspicion that the jury ignored this instruction. See Río Mar Assocs., LP, SE v. UHS of P.R., Inc., 522 F.3d 159, 163 (1st Cir. 2008) ([J]urors are presumed to follow the trial court's instructions.). There was nothing unfair or inappropriate as to the jury's verdict or the district court's rulings. - 27 -