Court Opinion

ID: 211132
Source: CourtListenerOpinion
Date Created: 2011-03-13 08:23:57+00
Date Added: 2024-06-11T17:28:04.849699
License: Public Domain

NOTE: Pursuant to Fed. Cir. R. 47.6, this disposition
                   is not citable as precedent. It is a public record.

 United States Court of Appeals for the Federal Circuit

                                    04-1486, -1488

              VENTURE INDUSTRIES CORPORATION, VEMCO, INC.,
              PATENT HOLDING COMPANY, and LARRY J. WINGET,

                                                      Plaintiffs-Cross Appellants,

                                           v.

             AUTOLIV ASP, INC. (successor to Morton International, Inc.),

                                                      Defendant-Appellant,

                                           v.

                             AUTOLIV, INCORPORATED,

                                                      Defendant.

                           __________________________

                           DECIDED: August 7, 2006
                           __________________________

Before LINN, DYK, and PROST, Circuit Judges.

PROST, Circuit Judge.

      Venture Industries Corp. (“Venture”) sued Autoliv ASP (“Autoliv”) for breach of

contract. The contract was a Supply Agreement that had been entered into as part of

the settlement of previous litigation between Venture and Morton International

(“Morton”), the predecessor in interest to Autoliv. The trial was complicated by the fact

that aside from the breach of Supply Agreement claim, many other claims relating to
other agreements resulting from the settlement had been stayed pending arbitration. In

particular, claims arising from a Cross Licensing agreement were stayed including

claims disputing who between Autoliv and Venture owned various technologies. This

complication led to numerous evidentiary rulings relating to testimony addressing any

technology ownership issue. As the district court did not err in these evidentiary rulings,

we affirm the district court’s rulings. Ultimately, the jury found that Autoliv had breached

the Supply Agreement and Venture was awarded $27,576,001 in damages and

$5,878,972 in resulting prejudgment interest. The district court did err in calculating the

accrual date of prejudgment interest.       In this case, the proper date to calculate

prejudgment interest is the date of filing the complaint. We therefore vacate the district

court’s calculation of prejudgment interest and remand the case to re-calculate the

prejudgment interest consistent with this opinion. Even though other claims remain

pending in this suit, we have jurisdiction over this appeal because the district court

entered judgment pursuant to Rule 54(b) of the Federal Rules of Civil Procedure as to

the breach of contract claim.

                                             I.

       After the entry of final judgment, Autoliv filed a motion for a new trial pursuant to

Rule 60(b) of the Federal Rules of Civil Procedure. The district court’s denial of that

motion is the subject of a separate appeal, which we also resolve today. Venture Indus.

Corp. v. Autoliv ASP, Inc., No. 05-1537 (Fed. Cir. Aug. 7, 2006). In the companion

case, we vacate and remand as to Autoliv’s request for a new trial pursuant to Rule

60(b)(3). Id., slip op at 21-22. Our affirmance of the judgment below and our remand

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for the re-computation of interest in this case are, of course, subject to the outcome of

the proceedings on remand in the companion case.

      Autoliv is the successor in interest to the Automotive Safety Products Unit of

Morton International, Inc. Morton was a ‘tier one’ supplier of safety restraint systems to

the automotive industry meaning that it directly supplied safety restraint systems to car

and truck manufacturers. Venture was, on the other hand, a ‘tier two’ supplier because

it supplied components to ‘tier one’ suppliers.       Venture custom molded plastics,

including air bag covers. From 1990 to 1995, Venture supplied Morton with air bag

covers.

      In 1995, Venture sued Morton in the Eastern District of Michigan asserting that

Morton had misappropriated intellectual property relating to air bag cover technology

owned by Venture. Morton counter-claimed asserting ownership of the technology. On

December 31, 1995, Morton and Venture settled the case by entering into a Settlement

Agreement containing two separate agreements: a Cross License Agreement and a

Supply Agreement. The Cross License Agreement permitted each party to use the

other’s claimed technology. One relevant provision of the Cross License Agreement

addressed the procedures for resolving any disputes arising from the Cross License

Agreement:

      If a dispute arises between the parties relating to [the Cross License
      Agreement] they shall use the following procedure prior to either party’s
      pursuing any other available remedy:
      ...
      (b) If the dispute relates to the inventorship and/or ownership of Subject
      Technology or whether any particular Invention constitutes Subject
      Technology, or whether Subject Technology constitutes Solely or Jointly
      Owned Subject Technology, the dispute shall be submitted to binding
      arbitration . . . .

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The other agreement that formed part of the settlement was the Supply Agreement. It

allowed Venture to place bids on all of Morton’s future air bag cover programs and

provided that Venture would be awarded those contracts where Venture’s bids were

“reasonably competitive.” The Supply Agreement stated that:

      (a) Morton shall give [Venture] the opportunity to quote on all of Morton’s
      world wide future Cover programs awarded to it by its customers . . .
      excluding, however, such future cover programs (i) for which Morton has
      been directed by its customer to use a source other than [Venture] or has
      been directed by its customer not to use [Venture], (ii) for which [Venture],
      in Morton’s reasonable judgment, does not have the capability at the time
      of quotation to meet their requirements for the particular program(s) under
      consideration; and (iii) which Morton has elected, in its sole discretion, to
      retain internally for manufacture by Morton itself.

      (b) All timely quotes received from [Venture] for programs described in
      subsection (a) above, shall be compared by Morton to quotes received
      from other established module cover suppliers for the same program(s).
      Provided [Venture’s] quote is reasonably competitive (as determined in
      good faith by Morton taking in to account price, terms, quality, ability to
      meet qualification requirements and delivery dates and other objective
      factors related to competitiveness), it shall be awarded such program(s).

      On November 3, 1999, Venture once again sued Morton and Autoliv as the

successor in interest to Morton, alleging that they had breached the Supply Agreement

and the Cross License Agreement and also alleging patent infringement and

misappropriation of trade secrets. Of all the claims in the amended complaint, only the

claim for the breach of the Supply Agreement was fully adjudicated. All remaining

claims were either stayed or dismissed. In particular, as the Cross License Agreement

contains a mandatory binding arbitration requirement, the claims that arose out of

disputes over the Cross License Agreement have been stayed pending the outcome of

arbitration. As the claim for breach of the Supply Agreement did not arise from the

Cross License Agreement, this claim was neither stayed nor taken up in the arbitration.

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       On October 23, 2003, prior to trial, Autoliv filed a motion in limine to exclude, inter

alia, evidence referencing the earlier lawsuit, the resulting Settlement Agreement and

the Cross License Agreement.          It argued such evidence was irrelevant, unfairly

prejudicial, and impermissible character evidence as the 1995 case and the Cross

License Agreement has “no relevance and no relationship” to this case. On October 29,

2003, the district court held a pre-trial conference addressing, among other things,

Autoliv’s motion in limine.    The district court ruled that Venture and Autoliv would

prepare a stipulation of facts describing the facts leading to the formation of the Supply

Agreement and stated that the stipulation “can be done in lieu of testimony, but I’m not

going to shade the testimony and I’m not going to confine [Venture] to the four corners.”

The resulting stipulation of facts was read to the jury at the start of trial on November 4,

2003 and stated that

       between 1990 and 1995, Venture had a relationship with Morton under
       which Venture manufactured air bag covers which it sold to Morton. Next,
       in 1995, Venture and Morton had a falling out which resulted in Venture
       suing Morton. Next, on December 31, 1995, the lawsuit was settled. A
       component of the settlement was a supply agreement pursuant to which
       Morton agreed to permit Venture to bid on [some] of Morton’s air bag
       cover programs . . . .

On the third day of trial, the district court re-visited the evidentiary issue and ruled on the

scope of evidence that could be admitted regarding the settlement of the prior litigation.

Along similar lines, on the fourth day of the trial, the district court again explained the

type of evidence that could be admitted stating that “I think Venture is entitled to explain

what the essence of the prior dispute was about so the jury can understand fully how

that prior dispute was settled. All they know now is it was a dispute between Morton

and Venture.”     Based on these evidentiary rulings, Venture introduced testimony

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relating to the origins of the Supply Agreement and relating to Venture’s licensing

practices with third party air bag suppliers. Autoliv moved to have the court issue a

limiting instruction as to this testimony but the district court denied the motion. Autoliv

also requested a specific jury instruction that placed the burden on Venture to establish

that its quotes were reasonably competitive with the quotes from other suppliers but the

district court declined to use Autoliv’s jury instruction.

       Ultimately, the case went to the jury and, on December 4, 2003, the jury found

that Autoliv had breached the Supply Agreement with respect to thirty three of thirty

eight air bag programs and it awarded Venture $33,459,135 in damages. That damage

award included $5,878,972 in prejudgment interest where the interest was calculated

from the date the damages were incurred.

       Autoliv appeals the district court’s evidentiary rulings, the district court’s refusal to

give a limiting instruction, and the district court’s refusal to use Autoliv’s jury instruction.

Venture cross-appeals the district court’s failure to award prejudgment interest from the

date of filing the complaint rather than from the date the damages accrued.

                                               II.

       As to the question of whether evidence was properly admitted at trial is a

procedural question, the regional circuit law controls the issue. Micro Chem., Inc. v.

Lextron, Inc., 317 F.3d 1387, 1390-91 (Fed. Cir. 2003). In the Sixth Circuit, a district

court’s decision to admit or exclude evidence is reviewed for abuse of discretion. Beck

v. Haik, 377 F.3d 624, 636 (6th Cir. 2004). Jury instructions are reviewed “as a whole to

determine whether they adequately inform the jury of relevant considerations and

provide a basis in law for the jury to reach its decision.” Beard v. Norwegian Caribbean

04-1486, -1488                                 6
Cruise Lines, 900 F.2d 71, 72 (6th Cir. 1990). A district court’s decision whether to use

a party’s jury instruction is reviewed for abuse of discretion. Hisrich v. Volvo Cars of N.

Am., Inc., 226 F.3d 445, 449 (6th Cir. 2000).

       On appeal, Autoliv argues that the district court erred in three ways. First, it

contends that Venture’s references to technology ownership were prejudicial and should

have been excluded. Second, once this evidence was admitted, Autoliv contends that

the district court erred by refusing to give a limiting instruction covering the admitted

evidence. Lastly, Autoliv argues that the trial court erred by refusing to use Autoliv’s

jury instruction.

                                              A.

       As to the initial evidentiary rulings, Autoliv argues that the district court improperly

expanded its initial decision to limit technology evidence when it allowed two particular

pieces of evidence. First, Autoliv objects to the testimony of Mr. Torakis who regarded

the Supply Agreement as the quid pro quo for the Cross Licensing Agreement stating

that “[Venture] wanted business, [Morton] wanted our ideas that was the deal.” Autoliv

also objects to the testimony of Mr. Winget who testified that third party suppliers like

Toyota Gosei and TRW had paid Venture a license fee of fifty cents per air bag cover

for Venture’s technology. Autoliv contends that this testimony unfairly prejudiced Autoliv

because evidence of a quid pro quo arrangement or of licensing payments suggests

that Venture owned the air bag technology.

       The district court was well within its discretion to allow testimony especially where

it felt it was needed to illuminate central issues to the case provided that “the judge

inform[s] the parties and give[s] them an opportunity to present evidence relating to the

04-1486, -1488                                7
newly revived issue.” Huss v. King Co., 338 F.3d 647, 651 (6th Cir. 2003). It is clear

from the record that where the district court revisited the scope of the testimony

because it was necessary for the jury’s understanding, it also allowed the parties

recourse to adjust their litigation strategies regarding this testimony. For example, on

November 6, 2003, the district court stated that

       at an earlier time in this case I made a ruling, and I don’t know whether
       any part of it was reserved, that the supply agreement was a stand-alone
       agreement and excluded any evidence of the cross-license agreement or
       the settlement agreement of the litigation.
                Based on the testimony I’ve heard over the last two days, I think
       that ruling was too restrictive. I don’t think this jury is capable of
       understanding the supply agreement . . . . I can’t understand why
       anybody would enter into such an agreement without knowing that there
       was a lawsuit, there was a settlement of the lawsuit, and the settlement of
       that lawsuit included both the cross-license agreement, because it was a
       dispute over technology, and included the supply agreement . . . . [T]hat
       doesn’t mean a wide-ranging inquiry can be made into it, but . . . on a
       limited basis, I will allow testimony on the settlement agreement and on
       the litigation . . . .

In response to this change, Mr. Horton, counsel for Autoliv asked, “Obviously the scope

of this is now changing dramatically. I may want to call a witness regarding the cross-

licensing agreement.” The judge responded, “You can. You can do anything you want.

In light of this ruling, if anyone wants to amend the witness list or the exhibit list, they

can do so.”

       Second, Autoliv argues that, once evidence of technology ownership was

admitted, the district court erred by not granting Autoliv’s request for a limiting

instruction as to the technology ownership evidence. We do not agree with Autoliv.

Autoliv requested a limiting instruction that two exhibits, Plaintiff’s Exhibits 129a and

130, were being introduced to demonstrate Autoliv’s ownership over the technology. As

stated by the district court the exhibits were admitted to demonstrate Autoliv’s

04-1486, -1488                               8
manufacturing capabilities and included no “claim to proprietorship [and] no claim to

ownership.” We discern no clear error in the district court’s refusal to give the limiting

instruction.

       Third, and lastly, as to the jury instruction, Autoliv argues that the district court

erred by refusing to grant its more specific instruction which stated that Venture bore the

burden of establishing that the exclusions in the Supply Agreement did not apply. “[A]

district court’s refusal to give a jury instruction constitutes reversible error if: ‘(1) the

omitted instructions are a correct standard of the law; (2) the instruction is not

substantially covered by other delivered charges; (3) the failure to give the instruction

impairs the requesting party’s theory of the case.’” Webster v. Edward D. Jones & Co.,

197 F.3d 815, 820 (6th Cir. 1999). The instruction that was read to the jury stated:

       Venture has the burden of proving each of the following propositions.
       First, that Venture performed all obligations required of it under the
       contract. Second, that Autoliv ASP failed to perform its obligations under
       the contract and breached the contract. Third, as a result of the breach of
       the contract, Venture was damaged. Autoliv ASP has the burden of
       proving it qualified for any exclusion set forth in the Supply Agreement
       which it maintains absolved it of an obligation under the Supply
       Agreement.

The district court also read the entirety of Section 2.2 of the Supply Agreement to the

jury. That section detailed the requirements of each party and the circumstances and

conditions under which Autoliv could have refused to award a cover program to

Venture.   Those sections of the Supply Agreement outline that programs could be

excluded from the Supply Agreement under specific circumstances such as where a

customer directs that a specific cover supplier be used rather than Venture. Under

these circumstances, we conclude that the district court properly instructed the jury that

Autoliv bore the burden of proving that the exclusions excused it from allowing Venture

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to bid on a contract. The district court did not abuse its discretion in rejecting Autoliv’s

proposed jury instruction.

        Autoliv’s arguments regarding the evidentiary and jury related rulings have been

considered and are found to be without merit. We see no reason to disturb those

rulings of the district court.

                                             III.

        In its cross-appeal, Venture argues that the district court erred by failing to award

Venture prejudgment interest from the date of the filing of the complaint, regardless of

the time the damages actually accrued. In particular, Venture argues that Michigan

Compiled Laws section 600.6013 explicitly grants prejudgment interest from the time of

filing of the complaint and that statute controls the grant of prejudgment interest in this

case.

        Prejudgment interest is neither unique to patent law nor any other subject matter

specific to the Federal Circuit’s jurisdiction. Therefore, in this case, the law of the Sixth

Circuit applies. See Biodex Corp. v. Loredon Biomedical, Inc., 946 F.2d 850, 855-56

(Fed. Cir. 1991).      Statutory interpretation is reviewed de novo.      United States v.

Thomas, 211 F.3d 316, 319 (6th Cir. 2000).             In the Sixth Circuit, the issue of

prejudgment interest is governed by the law of the forum state, which, in this case is

Michigan. The interpretation of a statute by a district court is reviewed de novo. United

States v. Thomas, 211 F.3d 316, 319 (6th Cir. 2000).

        Autoliv argues that prejudgment interest in this case should not be calculated

from the time the complaint was filed. It cites to a portion of Michigan Compiled Laws

section 600.6013(1) which states that

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       [i]nterest is allowed on a money judgment recovered in a civil action, as
       provided in this section. However, for complaints filed on or after October
       1, 1986, interest is not allowed on future damages from the date of filing
       the complaint to the date of entry of the judgment. As used in this
       subsection, “future damages” means that term as defined in section 6301.

But Autoliv relegates to a footnote the relevant information that under section 600.6301

the “future damages” discussed in section 600.6013 are “damages arising from

personal injury.” As this case is not one for damages for personal injury, the limits on

prejudgment interest cited by Autoliv are irrelevant. Instead, as has been held by the

Sixth Circuit in a breach of contact case,

       [i]n Michigan, prejudgment interest is not discretionary as the statute
       provides in relevant part that “interest on a money judgment recovered in
       a civil action shall be calculated from the date of filing the complaint” and
       “shall be calculated on the entire amount of the money judgment, including
       attorney fees and other costs.” The statute excepts from this proscription
       prejudgment interest on future damages for personal injuries.

Perceptron, Inc. v. Sensor Adaptive Mach., 221 F.3d 913, 922 (6th Cir. 2000) (citing

Mich. Comp. Laws Ann. § 600.6013(6) (West Supp. 2000)).              The Sixth Circuit in

Perceptron further articulates that

       [w]e are convinced Michigan law requires that prejudgment interest be
       calculated in this case on the entire judgment from the date that the
       complaint was filed. The prejudgment interest statute is remedial in nature
       and is to be construed liberally in favor of the prevailing party. The
       purpose of awarding statutory prejudgment interest is not only to
       compensate the prevailing party for the delay in the use of the money, but
       also to offset the costs of bringing the action and to provide an incentive
       for prompt settlement. The statute must be applied in accordance with its
       plain terms.

Id. at 923 (citations omitted). In view of the arguments made, we agree with Venture

that damages in this case should have been calculated from the date the complaint was

filed rather than when the damages accrued. See also Ayar v. Foodland Distribs., 698

N.W.2d 875, 877 (Mich. 2005) (finding the language of section 600.6013(8) “to be clear

04-1486, -1488                               11
and unambiguous”); Morales v. Auto-Owners Ins. Co., 672 N.W.2d 849 (Mich. 2003)

(holding that “the language of MCL 600.6013 unambiguously states that prejudgment

interest is to be calculated from the date the complaint is filed”).

                                             IV.

       In sum, we affirm the district court’s rulings on the evidentiary and procedural

issues, however, we conclude that the district court did err in calculating prejudgment

interest. In this case, the proper date to calculate prejudgment interest is the date of

filing the complaint. We, therefore, vacate the district court’s calculation of prejudgment

interest and remand the case to the district court to re-calculate the prejudgment

interest consistent with this opinion, and subject to the outcome of the remand

proceedings in the companion case.

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