Opinion ID: 1229135
Heading Depth: 3
Heading Rank: 2

Heading: Sufficiency of the Evidence of Proximately Caused Damages

Text: Wilkinson and Taulman also argue that there is insufficient evidence to support the jury's findings that their breaches of fiduciary duty proximately caused Navigant damage. Navigant sought damages associated with its liability on the Thanksgiving Tower lease and the value of the Claims Practice. As a preliminary matter, the parties disagree over the appropriate standard of review. Navigant argues that Wilkinson and Taulman waived the right to challenge the sufficiency of the evidence on the issue of proximate cause by failing to raise this issue in their Rule 50(a) motion at the close of evidence. The district court considered and denied judgment as a matter of law on this issue when it was raised in Wilkinson and Taulman's post-verdict Rule 50(b) motion, so Navigant really argues that the district court erred in considering it there. See FED.R.CIV.P. 50(b). Wilkinson and Taulman point to statements made in the Rule 50(a) motion and at the charge conference that they contend were sufficient to preserve this issue for appeal. Generally, a party who fails to present a Rule 50(a) motion on an issue at the close of evidence waives both its right to present a Rule 50(b) motion after judgment and its right to challenge the sufficiency of the evidence on appeal. See FED. R. CIV. P. 50(b); Flowers, 247 F.3d at 238. However, Rule 50(b) is construed liberally, and we may excuse technical noncompliance when the purposes of the rule are satisfied. Scottish Heritable Trust, PLC v. Peat Marwick Main & Co., 81 F.3d 606, 610 (5th Cir.1996). [T]he two basic purposes of this rule are `to enable the trial court to re-examine the question of evidentiary insufficiency as a matter of law if the jury returns a verdict contrary to the movant, and to alert the opposing party to the insufficiency before the case is submitted to the jury.' Id. (quoting MacArthur v. Univ. of Tex. Health Ctr., 45 F.3d 890, 897 (5th Cir.1995)). In addition, a defendant's objection to proposed jury instructions on grounds pertaining to the sufficiency of the evidence issues it seeks to appeal may satisfy these purposes. Id. Our examination of the record convinces us that although Wilkinson and Taulman failed to explicitly move for judgment as a matter of law on the issue of proximate cause for the breach of fiduciary duty claim, their Rule 50(a) motion and objections to the jury instructions sufficiently addressed this issue to serve the purposes of Rule 50(b) and preserve it for appeal. In their objections to the jury instructions, Wilkinson and Taulman objected to the instruction for damages caused by the breach of fiduciary duty on the grounds that there was no evidence, or insufficient evidence, of damages to the Claims Practice. Further, as part of the Rule 50(a) motion, Wilkinson and Taulman argued with regard to the breach of contract claims that there was insufficient evidence to support a finding that Navigant's damages were caused by the disclosure of confidential information or any other breach of contract. Finally, in an objection to the instruction for the misappropriation of trade secrets claim, Wilkinson and Taulman argued that Navigant's theory of recovery assumes a degree of causation that hasn't been established. We believe the objection to the jury instruction on breach of fiduciary duty damages was sufficient to alert the district court and Navigant to Wilkinson and Taulman's contention that there was insufficient evidence to find that Navigant's damages were proximately caused by a breach of fiduciary duty. In addition, the Rule 50(a) motion and objections to the jury charge raised the same argument in the context of the breach of contract and misappropriation of trade secrets claims. Since the conduct that formed the basis for these claimsdisclosure of confidential information and solicitation of employees formed at least a portion of the basis for the breach of fiduciary duty claim, these arguments also served as notice that Wilkinson and Taulman believed the evidence of this conduct insufficient to support a finding of proximate cause for breach of fiduciary duty. Accordingly, we conclude that Wilkinson and Taulman did not waive their right to challenge the sufficiency of the evidence on appeal. The proper standard of review is therefore the de novo standard articulated above. Wilkinson and Taulman argue that all of Navigant's claimed damages were caused solely by the fact that Wilkinson and Taulman resigned and some of their clients followed them to a new firm. Specifically, they argue that there was no evidence that Navigant suffered any damages proximately caused by the disclosure of confidential information or solicitation of employees. They do not contest the evidence of proximate cause as it relates to damages caused by Navigant's liability on the Thanksgiving Tower lease. Proximate cause consists of two elements, foreseeability and cause in fact. McClure v. Allied Stores of Tex., Inc., 608 S.W.2d 901, 903 (Tex.1980); see also Baker Botts, L.L.P. v. Cailloux, 224 S.W.3d 723, 734 (Tex.App.San Antonio 2007, pet. denied) (discussing proximate cause in the breach of fiduciary duty context). Proximate cause cannot be established by mere guess or conjecture, but rather must be proved by evidence of probative force. McClure, 608 S.W.2d at 903. There need not, however, be direct and positive proof, as the jury may infer proximate cause `from the circumstances surrounding the event.' Mosley v. Excel Corp., 109 F.3d 1006, 1009 (5th Cir.1997) (quoting B.M. & R. Interests v. Snyder, 453 S.W.2d 360, 363 (Tex.App.Tyler 1970, writ ref'd n.r.e.)); see also Havner v. E-Z Mart Stores, Inc., 825 S.W.2d 456, 459 (Tex.1992) ([C]ircumstantial evidence and inferences therefrom are a sufficient basis for a finding of causation.). The evidence at trial showed that confidential information was provided to LECG well in advance of Wilkinson and Taulman's resignations. Further, it showed that LECG used and relied on that information to plan an acquisition of the employees and clients of the Claims Practice. In May 2002, LECG first received a proposal of the type that Wilkinson and Taulman circulated to Navigant's other competitors. As previously described, this document provided a description of the business operations, finances, and employee and client relationships of the Claims Practice. When serious negotiations between Wilkinson and LECG began in late August 2002, Wilkinson sent LECG an updated proforma that contained a more detailed set of information. In addition to basic revenue and backlog summaries, this document contained a list of employees, organized by position, with salary and chargeability information. It also broke down the individual revenue projections for each of the Claims Practice's current and projected engagements, and for each engagement named the employee who served as the project manager. An internal LECG email, which instructed recipients to be discreet, showed that by August 30, 2002still a month before Wilkinson and Taulman resignedLECG already had an approximate count of the number of employees who would be part of the deal with Wilkinson and Taulman. On September 26, 2002, four days before Wilkinson and Taulman's resignations were to become effective, LECG officials were planning a meeting to talk about Dallas, a reference to the location of the Claims Practice, and were discussing the estimated revenue base and staffing needs of their anticipated new business. As discussed above, there was evidence to support a finding that Wilkinson and Taulman solicited Navigant employees before they resigned. There was also evidence that a rapid departure of important Navigant employees shortly after Wilkinson and Taulman resigned left Navigant unable to service its clients. [9] Within days of Wilkinson and Taulman's resignations, a number of Navigant's employees had already accepted offers for employment from LECG, and some had in fact already begun working. Navigant's general counsel testified that because Wilkinson and Taulman had taken all the key employees to LECG when they resigned, Navigant was no longer able to service its clients' needs and lost its ability to compete for and retain clients. In an e-mail, a Navigant executive explained that there was no way Navigant could keep a particular engagement because all of the key employees on the project had left the firm. One of Navigant's former clients testified that he switched his account to LECG because Navigant was no longer capable of servicing it, but that he would have considered keeping business at Navigant if it had retained the capability and technical employees necessary to perform the work associated with his account. This client also explained that the particular Navigant employee who performed much of the work associated with his account, Cindi Straup, had left for LECG. If she had stayed, the client would have considered keeping his account with Navigant. Based on the evidence presented at trial, the jury could have concluded that Navigant's damages were in part caused by the fact that Wilkinson and Taulman provided LECG with information that enabled it to compete with Navigant on advantageous terms, thus diminishing Navigant's ability to retain its employees and clients. In addition, the jury was entitled to draw the inference that Wilkinson and Taulman's pre-resignation solicitations of Navigant employees prepared and encouraged them to leave Navigant and follow Wilkinson and Taulman to a competitor once they resigned, which had the effect of further undercutting Navigant's ability to retain its own employees and, thus, its clients. [10] Wilkinson and Taulman nonetheless ask us to reject what they claim is an inference of causation based solely on the following chronology of events: (1) Wilkinson and Taulman did bad things before they left; (2) after they left Navigant suffered damages; (3) therefore the bad things Wilkinson and Taulman did must have caused Navigant's damages. But our review of the record convinces us that this rough formulation mischaracterizes Navigant's theory of causation and ignores the facts and reasonable inferences to be drawn from the evidence actually placed in front of the jury. Alert avoidance of the classical fallacy of post hoc, ergo propter hoc does not require rejection of common sense inferences. Swanner v. United States, 406 F.2d 716, 718 (5th Cir.1969). We conclude that there was sufficient evidence to support the jury's findings here.