Opinion ID: 169778
Heading Depth: 4
Heading Rank: 1

Heading: Benefitting from M isappropriation

Text: In its post-trial discussion regarding the admissibility of Cartel’s expert witness on damages, the district court identified a “fatal flaw” in Cartel’s case. (R. Vol. 3 at 1080.) The trial court observed: Cartel simply failed to show that the Bank used any identifying broker information, i.e. a broker’s name and telephone number contained in any single BPO supplied by Cartel, by, for example, bypassing Cartel by contacting that broker and obtaining a BPO from him or her and selling it to a third party, thereby benefitting the Bank through that use of that particular trade secret. Neither Cartel’s expert nor any other witness made a connection between any information gleaned from a Cartel BPO to a subsequent contact with a broker by the Bank or a subsequent purchase of a BPO from any such broker by the Bank. (Id.) The district court continued: [I]t does not follow (as a matter of law ) that Cartel can claim generally any percentage of the Bank’s B PO business or profits untethered to the misuse of identifiable broker information provided to defendants by Cartel. While the number of brokers appearing in both Cartel’s and the Bank’s databases appears to be as many as -20- 1356 (and Cartel’s counsel intimated there was more), such overlap would have been the starting point for discerning any legitimate basis for damages. The contention that the taking of those trade secrets was somehow instrumental in the formation of the Bank’s new BPO database consisting of 62,000 names justifying damages to Cartel of all benefits derived from that database lacks a proper tie between trade secrets misappropriated and benefits derived therefrom. (Id. at 1080-81.) In its post-trial brief responding to the district court’s discussion, Cartel pointed out that Ann Gilbert specifically testified names were taken from the Cartel database and placed into the Ocwen Advisors’ database. Coats testified he was personally contacted and several of the brokers appearing on both databases no longer performed work through Cartel for the Bank after the contest. Finally, Cartel addressed the district court’s misapprehension that the Bank’s database contained 62,000 names, correctly citing the amount at 7,000. It asserted the overlap between the Bank’s “use” brokers, (3,000 names), and those identical to Cartel’s list, (1,320 names), was a significant misappropriation. Cartel argued this evidence, together, was sufficient for the jury to infer the Bank used Cartel’s information to purchase BPOs for a profit. The district court rejected these argument in its Final Order, stating it did “not deem any lay witness testimony or exhibit to be significant or credible enough to justify further reconsideration as to that claim.” (R. Vol. 6 at 1993.) Although the court’s post-trial discussion analyzed TenBrook’s testimony pursuant to gatekeeper role under Daubert v. M errell Dow Pharm aceuticals, 509 -21- U.S. 579 (1993), the district court’s ultimate ruling constitutes an entry of judgment as a matter of law that Cartel failed to provide sufficient evidence the Bank received any gain from its misappropriation. Thus, this aspect of the court’s ruling addressed the traceability of damages (causation), not the whether the amount w as reasonably established by expert testimony. W e review de novo the trial court’s determination Cartel’s misappropriation damages failed as a matter of law. See Reeves v. Sanderson Plum bing Prod’s. Inc., 530 U.S. 133, 150 (2000). Our review encompasses all of the evidence in the record, drawing all reasonable inferences in favor of the nonmoving party, without making credibility determinations or w eighing the evidence. Id. “[A]lthough the court should review the record as a whole, it must disregard all evidence favorable to the moving party that the jury is not required to believe.” Id. “In diversity cases, the substantive law of the forum state governs the analysis of the underlying claims, including specification of the applicable standards of proof, but federal law controls the ultimate, procedural question whether judgment as a matter of law is appropriate.” Haberman v. The H artford Ins. Group, 443 F.3d 1257, 1264 (10th Cir. 2006). Accordingly, the substantive law of Colorado applies and governs as w e review the issues raised on appeal. Cartel’s theory of damages, unjust enrichment, is specifically authorized by statute. Colo. Rev. Stat. § 7-74-104. The question before us is whether Cartel presented sufficient evidence for the jury to conclude the Bank was unjustly -22- enriched by its misappropriation of names from Cartel’s list. W e must keep in mind, “a directed verdict . . . should be granted only in the clearest of cases.” Park Rise Hom eowners Ass’n, Inc. v. Res. Constr., 155 P.3d 427, 431 (Colo. App. 2006), cert. denied, . denied, 2007 W L 93091 (2007). The district court determined Cartel’s damages claim failed because it had shown no direct evidence of the Bank’s use of any name on Cartel’s list to purchase and resell a BPO. However, direct evidence is not necessary. A conclusion concerning causation may result from a fact-finder’s “reasonable inferences from the circumstantial evidence presented.” Ackerm an v. Hilton’s M ech. M en, Inc., 914 P.2d 524, 527 (Colo. App. 1996). M oreover, contrary to the trial court’s post-trial assessment of the significance and credibility of the trial testimony and exhibits, it is the fact-finder who “must resolve conflicts in the evidence and determine the credibility of witnesses and the probative value of the evidence.” Id. If the jury’s conclusion is supported by probative evidence which warrants a reasonable belief in the existence of facts supporting a particular finding, the jury’s conclusion is binding on review. Id.; see also M orales v. Golston, 141 P.3d 901, 906 (Colo. App. 2005), cert. denied, 2006 W L 2467851 (2006). The district court erred in concluding the jury did not have sufficient evidence to reasonably infer the Bank used the names it took from Cartel to purchase BPO s and resell them for a profit. Kreuger testified the Bank did not -23- have a direct retail vendor list as of Labor Day 1999. Several witnesses testified it w ould take a significant amount of time to create a profitable national database. Gilbert testified Ocwen Advisors’ routine efforts to build a database, including use of the internet, were tapped out by January 2000. She further testified the names taken during the M arch contest were from Cartel BPOs and were apportioned between staff members w ho then called to ask the real estate professional to work directly for Ocwen Advisors/the Bank. She stated the company received applications, approved them and added the names to the system. This practice continued through at least November 2000. At the time the Bank’s vendor list was provided to Cartel, over one third of the Bank’s “use” realtors matched Cartel’s list. M oreover, by mid-2000 the Bank’s orders to national vendors decreased drastically and orders to Cartel stopped entirely by 2001. Thus, the jury could reasonably infer the Bank used the misappropriated names to contact the agents, purchase BPOs directly, and resell the BPOs. The district court also determined Cartel had not shown the Bank was “enriched” from the sale of BPOs, i.e. no profit was shown. However, Krueger testified he proposed the change in the Bank’s business plan to make the division a profit center rather than a cost center and to save money. He testified the Bank was ordering 50,000 to 60,000 BPO s from the national vendors per year and the gross savings/profits from the direct order and resale of 60,000 BPO s would be approximately $2,700,000.00 if the Bank paid $50.00 directly to the vendor and -24- resold the BPO for $95.00 to a third party. W illiam Erbey stated, as of 2004, the Bank would pay an agent or broker approximately $45 to $50 to provide a BPO and then sell the BPO for a profit. A reviewed BPO would be sold for approximately $150 and an unreviewed BPO for approximately $70. In any case, the evidence was sufficient for the jury to reasonably infer the Bank’s use of the names on Cartel’s list generated either a savings or a profit for the Bank, establishing the traceability of the damages.