Court Opinion

ID: 9471521
Source: CourtListenerOpinion
Date Created: 2023-08-05 03:34:34.707351+00
Date Added: 2024-06-11T17:42:26.998722
License: Public Domain

On Petition for Rehearing
Both sides have filed petitions for rehearing. Upon consideration, we adhere to our original opinion insofar as plaintiffs’ petition for rehearing sought modification of the denial of plaintiffs’ antitrust standing and punitive damages award. However, we grant Johnson & Johnson’s (J & J) petition for rehearing and vacate the fraud judgment with remand for a new trial for the reasons stated below.

The Fraud Claim

In our original opinion we affirmed the fraud count but granted a new trial on the punitive damages awarded under the fraud recovery. We now agree with J & J that we have severed issues that are effectively intertwined. As J & J points out, we have previously refused to grant a new trial solely on punitive damages. In Nodak Oil Co. v. Mobil Oil Corp., 533 F.2d 401, 411 (8th Cir.1976), for example, we refused to require the district court to grant a new trial only on punitive damages when the punitive damages were held excessive. Instead, we required a new trial on both issues of liability and damages since the issue of punitive damages was so interwoven with the substantive merits of the fraud count. See also Slater v. KFC Corp., 621 F.2d 932, 938 (8th Cir.1980) (“we conclude that the issues of damages and liability in this case are so interwoven as to require a new trial on both”); Stanger v. Gordon, 309 Minn. 215, 244 N.W.2d 628, 632 (1976) (“we regard a retrial limited to the issue of punitive damages as impractical”). We find these cases controlling.
Moreover, in Gasoline Products Co. v. Champlin Refining Co., 283 U.S. 494, 51 S.Ct. 513, 75 L.Ed. 1188 (1931), the Supreme Court stated:
Where the practice permits a partial new trial, it may not properly be resorted to unless it clearly appears that the issue to be retried is so distinct and separable from the others that a trial of it alone may be had without injustice. ... Here the question of damages on the counterclaim is so interwoven with that of liability that the former cannot be submitted to the jury independently of the latter without confusion and uncertainty, which would amount to a denial of a fair trial.
Id. at 500, 51 S.Ct. at 515 (citations omitted).1
*1389We therefore vacate the entire judgment for fraud and remand for a new trial on liability and damages, both actual and punitive.

Breach of Contract

In our original opinion we did not address plaintiffs’ alternative recovery of $5.7 million for breach of contract because we affirmed the $6,275 million fraud judgment. However, in view of the above ruling, we now address the breach of contract judgment.
J & J challenges plaintiffs’ recovery for breach of contract on the grounds that a breach was not proven and that parol evidence was impermissibly submitted to the jury. Our analysis causes us to disagree with both contentions. The district court recited ample evidence for the jury to find a breach of contract. See McDonald v. Johnson & Johnson, 537 F.Supp. 1282, 1349—50 (D.Minn.1982). Our reading of the record confirms this. The plaintiffs’ claim relating to the contract breach centers on paragraph 10(a). This paragraph provides:
Stockholders [plaintiffs] and Johnson & Johnson recognize and acknowledge that the relationship which will exist between Johnson & Johnson, the Company [Stim-Tech] and the Stockholders upon corn-summation of the transactions contemplated herein, must be based on a high degree of mutual trust and confidence by the Company, Stockholders and Johnson & Johnson. Stockholders and Johnson & Johnson agree that each will at all times act in respect to its dealings with the Company and its operations, and subject to its dealings with the Company and its operations, and subject to the exercise of reasonable business judgment, act [sic] in such a way as to promote to the extent reasonably possible the successful operation and growth of the Company.
Both parties agree that to prove a breach of this paragraph requires a showing of bad faith. As the district court set forth, the facts relating to J & J’s actions subsequent to the 1974 contract could reasonably be construed by the jury to have been taken consciously and in bad faith. See id. at 1349.
We also find that parol evidence was properly admitted to explain the circumstances surrounding the execution of the written contract in an effort to derive the appropriate meaning of the general contract language. See id. at 1348. This is in accord with Minnesota law. See Anderson v. Kammeier, 262 N.W.2d 366, 370 n. 2 (Minn.1977). Additionally, this court has recognized that facial ambiguity is not a prerequisite to the use of parol evidence to aid in contract interpretation under Minnesota law. Telex Corp. v. Balch, 382 F.2d 211, 217 (8th Cir.1967). Therefore, plaintiffs were entitled to show statements made by J & J during the contract negotiations.
We therefore affirm the $5.7 million judgment on the breach of contract count. We vacate and remand the judgment on the fraud and punitive damages count; in doing so, we make it clear that any recovery in the new trial for fraud in terms of compensatory damages must be discounted by the breach of contract damage award.