Opinion ID: 4525695
Heading Depth: 4
Heading Rank: 2

Heading: Standard of Review Under Tennessee Law

Text: Apart from applying the correct law for a claim of fraudulent concealment, the district court’s analysis of Thomas Nelson’s Rule 50(b) motion is flawed. Yet even so, the end result does not change. We also find there was no duty to disclose. See Abercrombie & Fitch Stores, Inc., 280 F.3d at 629 (noting court of appeals can affirm on different grounds supported by the record). - 10 - Case Nos. 19-5836/5838, EPAC Technologies, Inc. v. HarperCollins Christian Publishing, Inc. To review a motion under Rule 50(b), “[a] federal court exercising its diversity jurisdiction applies the law of the state whose substantive law governs the action to determine whether to grant or deny a motion for judgment as a matter of law based on insufficiency of the evidence.” Estate of Riddle ex rel. Riddle v. S. Farm Bureau Life Ins. Co., 421 F.3d 400, 408 (6th Cir. 2005) (citing Morales v. Am. Honda Motor Co., 151 F.3d 500, 506 (6th Cir. 1998)). However, legal determinations (even in diversity cases) are always reviewed de novo. Zurich Ins. Co., 97 F.3d at 176. The Tennessee standard of review provides: In ruling on the motion, the court must take the strongest legitimate view of the evidence in favor of the non-moving party. In other words, the court must remove any conflict in the evidence by construing it in the light most favorable to the nonmovant and discarding all countervailing evidence. The court may grant the motion only if, after assessing the evidence according to the foregoing standards, it determines that reasonable minds could not differ as to the conclusions to be drawn from the evidence. State Indus., Inc. v. Twin City Fire Ins. Co., 158 F. App’x 694, 696 (6th Cir. 2005) (citing Conatser v. Clarksville Coca-Cola Bottling Co., 920 S.W.2d 646, 647 (Tenn. 1995)). As an initial matter, the question of whether a confidential relationship exists, giving rise to a duty to disclose, is a question of fact. Matlock v. Simpson, 902 S.W.2d 384, 385 (Tenn. 1995) (“[T]he issue of whether or not a confidential relationship existed, if not admitted, was a question of fact.”) (emphasis removed); Condo. Mgmt. Assocs., 2010 WL 424592, at ; see also U.S. Bank Nat. Ass’n ex rel. CWCapital Asset Mgmt. LLC v. Vill. at Lakeridge, LLC, 138 S. Ct. 960, 967 (2018). The district court mistakenly applied the federal standard of review for a motion under Rule 50(b). Whether the Tennessee and federal standards differ is beside the point. It’s clear the district court didn’t view the evidence in the light most favorable to EPAC. Instead, it analyzed all the evidence that shows an arm’s length transaction (arguably, all the evidence that favors - 11 - Case Nos. 19-5836/5838, EPAC Technologies, Inc. v. HarperCollins Christian Publishing, Inc. Thomas Nelson’s theory of the claim), not EPAC’s material evidence presented to show something more than an arm’s length transaction. Tennessee law requires us to take all of EPAC’s material facts that show dominion and control. See In re Estate of Blackburn, 253 S.W.3d 603, 613 (Tenn. Ct. App. 2007). And when reviewing a Rule 50(b) motion, we cannot weigh evidence or stand as the thirteenth juror. Mairose v. Fed. Exp. Corp., 86 S.W.3d 502, 511 (Tenn. Ct. App. 2001). But what if there is a complete lack of evidence? Then the answer is clear. See Harrogate Corp. v. Sys. Sales Corp., 915 S.W.2d 812, 817 (Tenn. Ct. App. 1995); Handley v. May, 588 S.W.2d 772, 777 (Tenn. Ct. App. 1979). There is no material evidence in the record that shows Thomas Nelson was in a position to exercise influence and control over EPAC. Therefore, there’s no duty to disclose. EPAC challenges this conclusion on multiple grounds. First, EPAC argues that the district court can’t even consider “dominion and control” in analyzing Thomas Nelson’s Rule 50(b) postverdict motion. EPAC argues that if a showing of dominion and influence is required, then EPAC is entitled to a new trial because the jury was erroneously instructed. We usually analyze whether a new trial is warranted based on an erroneous jury instruction by asking if that jury instruction was “prejudicial.” Miami Valley Fair Housing Cent., Inc. v. Connor Grp., 725 F.3d 571, 580 (6th Cir. 2013). It’s hard to see how a jury instructed on an arguably lower standard that resulted in a favorable decision to EPAC somehow prejudiced EPAC. To grant a new trial, the real question is whether there is any material dispute as to the issue of dominion and influence—and here there is no material dispute—therefore, a new trial is not warranted. Next, EPAC argues (in its reply brief only) that Thomas Nelson waived the ability to include “exercise of dominion and influence” as a requirement because it never raised that argument in its Rule 50(a) pre-verdict motion. Thomas Nelson’s first Rule 50(a) motion was - 12 - Case Nos. 19-5836/5838, EPAC Technologies, Inc. v. HarperCollins Christian Publishing, Inc. specific enough, in that it argued there was no duty to disclose and even argued more specifically that there wasn’t a relationship of trust and confidence. Either way, the whole point of a Rule 50(a) motion is to provide notice to the nonmoving party of the arguments raised against it. See Bach v. First Union Nat. Bank, 149 F. App’x 354, 360 (6th Cir. 2005). And EPAC never argues it lacked notice of the dominion and influence requirement. EPAC likely did have notice of the more granular issues of what constitutes a relationship of trust and confidence: dominion and influence is wrapped up in the very definition of a relationship of trust and confidence. Indeed, EPAC doesn’t say what further evidence it would have presented to show dominion and influence—in its reply brief it cites to evidence already presented. Finally (again, in its reply brief only), EPAC argues that there is evidence that shows dominion and influence. To support this assertion, EPAC largely relies on two pieces of evidence: one, that Thomas Nelson “directed” EPAC to open a new print facility and two, that Thomas Nelson had confidential information about EPAC’s business that it could use against EPAC. Apart from the fact EPAC likely waived this argument by raising it for the first time in its reply brief, this evidence is not material evidence that shows dominion and influence. Cf. A & B Food Servs. Corp. v. Judy's Foods, Inc., 798 F.2d 468 (6th Cir. 1986) (per curiam) (table); Edwards v. Travelers Ins. of Hartford, Conn., 563 F.2d 105, 115 (6th Cir. 1977). Duty to disclose under Tennessee law occurs where “confidence is placed by one in the other and the recipient of that confidence is the dominant personality, with the ability, because of that confidence, to influence and exercise dominion over the weaker or dominated party . . . .” Edwards, 563 F.2d at 115. Reasonable minds wouldn’t differ—EPAC’s purported evidence doesn’t show dominion and influence. With a complete lack of evidence, there is only one conclusion: there was no duty to disclose. - 13 - Case Nos. 19-5836/5838, EPAC Technologies, Inc. v. HarperCollins Christian Publishing, Inc.