Opinion ID: 2982323
Heading Depth: 3
Heading Rank: 2

Heading: Calculation of Constructive-Trust Amount

Text: At the conclusion of the second of the two jury trials, the district court conducted a hearing on the remaining equitable issue: the plaintiffs= request for creation of a constructive trust over the proceeds realized from the licensing agreement with Carbontec. Over the objections of Headwaters, the district court granted the plaintiffs= request and awarded a constructive trust in the amount of $16,011,771, an amount equal to the total of the 2009 and 2010 jury awards. The plaintiffs now argue that it was inappropriate for the district judge to adopt the lower jury-award amount, rather than the plaintiffs= $43,986,389 requested figure, for four reasons: (1) the district court, sitting in equity, should not have applied the same measure of damages as did the jury, which was considering a legal remedy; (2) in adopting the jury=s damage-award amount, the district court improperly concluded that the jury based its award on the fact that Headwaters made significant contributions to the technology; (3) a constructive trust award should be reduced only when the value added by a defendant Adwarfs the value of the original ideas,@ a situation that is not present here; and (4) the jury verdicts in favor of the plaintiffs were artificially low because, as argued previously, the jurors inappropriately considered the Macrotech and Marilyn Davidson shares in their damages calculation. We review equitable remedies, including the imposition of a constructive trust, for an abuse of discretion. See, e.g., Barrett v. Sec=y of Health & Human Servs., 840 F.2d 1259, 1263 20 Nos. 12-5592/12-5594/12-5595, Boynton v. Headwaters, Inc. (6th Cir. 1987). AAn abuse of discretion occurs when (1) the district court=s decision is based on an erroneous conclusion of law, (2) the district court=s findings are clearly erroneous, or (3) the district court=s decision is clearly unreasonable, arbitrary or fanciful.@ Beil v. Lakewood Eng'g & Mfg. Co., 15 F.3d 546, 551 (6th Cir. 1994) (citation omitted). We find no such abuse of the district court=s discretion in this matter. First, in Tennessee, A[a] court of equity in decreeing a constructive trust is bound by no unyielding formula.@ Holt v. Holt, 995 S.W.2d 68, 71 (Tenn. 1999) (quoting Beatty v. Guggenheim Exploration Co., 122 N.E. 378, 380-81 (N.Y. 1919)). The district court clearly did not abuse its broad discretion in adopting the damage-award figures supplied by the juries. Second, the district court specifically referred in its ruling to the testimony provided by a number of Headwaters employees that the defendant company indeed did make significant contributions to the success of the '629 Patent. In light of that factual finding, the district court did not abuse its discretion in concluding that it would be inappropriate to order Headwaters to return all income it received as a result of the patent. Third, the plaintiffs= argument that such a reduction in an award is justified only when the defendant=s contributions Adwarf@ the value of the original product is misplaced. The plaintiffs= position on this issue relies upon language taken from the Ninth Circuit=s opinion in Mattel, Inc. v. MGA Entertainment, Inc., 616 F.3d 904 (9th Cir. 2010). But an opinion from another circuit, although persuasive, is not binding on this court. Moreover, Mattel does not announce the broad principle the plaintiffs would have us apply here. In Mattel, the Ninth Circuit recognized only 21 Nos. 12-5592/12-5594/12-5595, Boynton v. Headwaters, Inc. that the defendant in that case did prove that its efforts >dwarfed the value= of the original product, not that the company was required to prove such disproportionate contributions in order to justify a downward adjustment of an award sought by the plaintiff. Thus, nothing in the language of Mattel suggests that the district court=s decision in this matter constituted an abuse of its discretion. Finally, for the same reasons stated previously in this opinion, the plaintiffs= argument that the juries erred in allegedly considering the Adtech shares owned by Macrotech and by Marilyn Davidson in arriving at its suggested damage figure is without merit. The plaintiffs offer no new analysis or evidence on this issue to warrant our reaching a decision that the district court abused its discretion in ordering its equitable remedy.