Court Opinion

ID: 171231
Source: CourtListenerOpinion
Date Created: 2010-08-14 18:30:07+00
Date Added: 2024-06-11T17:25:12.453719
License: Public Domain

FILED
                                                               United States Court of Appeals
                                                                       Tenth Circuit
                     UNITED STATES COURT OF APPEALS
                                                                   September 17, 2008
                                 TENTH CIRCUIT
                                                                   Elisabeth A. Shumaker
                                                                       Clerk of Court

 JAMES R. KEARL; GREGORY D.
 ADAMS; STEVEN N. WIGGINS,

          Plaintiffs-Appellees/Cross-
          Appellants,
                                                 Nos. 07-4021 and 07-4026
                                               (D.C. No. 2:04-CV-00175-BSJ)
 v.
                                                          (D. Utah)
 GORDON C. RAUSSER,

          Defendant-Appellant/Cross-
          Appellee.

                            ORDER AND JUDGMENT *

Before TYMKOVICH, GORSUCH, Circuit Judges, and PARKER, Senior
District Judge. **

      The parties before us, four professional economists, dispute the existence

and terms of a contract for sharing proceeds associated with the transfer of their

litigation consulting practices from the Law and Economic Consulting Group

(“LECG”) to Charles River Associates (“CRA”). Perhaps unsurprisingly given

      *
         This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
      **
          Honorable James A. Parker, Senior District Court Judge, United States
District Court for the District of New Mexico, sitting by designation.
their trade, the central issue on appeal before us concerns the propriety of

plaintiffs’ damages theory. Because that theory, which yielded a jury verdict of

more than $5 million, allowed plaintiffs to recover losses up to the time of trial –

without any reference to the date of the alleged breach of contract – we are

obliged to reverse. At the same time, we reject the parties’ several remaining

challenges to the district court’s judgment.

                                          I

                                          A

      Our review rests on the following facts, recounted here, as they must be, in

the light most favorable to the jury’s verdict in plaintiffs’ favor. The defendant,

Dr. Rausser, is a tenured professor at the University of California, Berkeley.

Among the plaintiffs, Dr. James Kearl and Dr. Steven Wiggins are tenured

professors at Brigham Young University and Texas A&M University,

respectively, while Dr. Gregory Adams principally serves as the manager of

economic consulting service projects done by others. Prior to 2000, Drs. Rausser,

Kearl, and Wiggins each had individual consulting agreements with, and Dr.

Adams was a full-time employee of, LECG. Dr. Rausser also served as Dr.

Adams’s doctoral thesis advisor while Dr. Adams was in graduate school.

Though they sometimes worked together on projects, each professor signed and

negotiated his own contract with LECG. These agreements provided that each

professor would receive almost all of the billings for work he performed

                                         -2-
personally, but a lower percentage of billings for work performed on their cases

by LECG staff. Dr. Adams, as a full-time employee of LECG, separately

received salary, bonuses, and benefits.

      In 2000, Dr. Rausser moved his consulting practice to CRA. In addition to

bringing his own book of business, Dr. Rausser’s negotiations with CRA

contemplated that he would recruit other economic consultants to CRA. Plaintiffs

were among the possible – and ultimately successful – recruits. As they had at

LECG, each individually negotiated his own agreement with CRA. Dr. Adams

signed his agreement with CRA on October 2, 2000, Dr. Rausser on October 18,

and Drs. Kearl and Wiggins on November 1. These agreements differed in certain

material respects. The agreements signed by Drs. Kearl and Wiggins provided

that they would receive 100% of the fees collected for their own time and a 15%

share of CRA staff billables for cases each brought to the company. But Dr.

Wiggins also received funding for an office in College Station, Texas, and an

executive assistant, as well as a signing bonus of $100,000, structured as a

forgivable loan. Dr. Kearl, while not receiving funding for an office or staff,

received an additional $10,000 cash payment. As a full-time employee, Dr.

Adams received an annual salary of $175,000, a minimum annual bonus of

$125,000, as well as 10,000 stock options, a forgivable loan for $75,000, and

various other benefits.

                                          -3-
      Dr. Rausser’s agreement was considerably more lucrative. Dr. Rausser

received a $250,000 signing bonus; pursuant to an “Asset Purchase Agreement,” a

$4.75 million loan, the payments on which would be offset by payments from

CRA to Dr. Rausser; and various prescribed annual bonuses. Most importantly

for our purposes, Dr. Rausser received two separate, forgivable loans pursuant to

two “Stock Purchase Agreements.” The first such agreement involved a $2

million loan to Dr. Rausser and required him to use the funds to purchase 180,383

shares of CRA stock; the second agreement involved a $2.5 million loan and

required Dr. Rausser to purchase 225,479 shares of stock. CRA agreed to forgive

the former loan if Dr. Rausser met a billing target of $20 million over any twelve

month period prior to November 29, 2003; the latter would be forgiven if Dr.

Rausser met a billing target of $10 million over any twelve month period in the

following two years. For purposes of ascertaining whether he met his billing

targets, Dr. Rausser could include not only his own billable time but also hours

logged by plaintiffs. At the time Dr. Rausser purchased the total of 405,862

shares of stock, the stock price was $11.0875 per share.

      These stock purchases did not come free of restrictions and could not be

sold by Dr. Rausser whenever he saw fit. Rather, the 180,383 shares were

restricted shares under Rule 144 of the Securities Act of 1933, which meant they

had to be held indefinitely unless subsequently registered under the Securities

                                        -4-
Act, or an exemption from registration was obtained. 1 The second acquisition,

totaling 225,479 shares, had the same Rule 144 restrictions but, in addition, Dr.

Rausser was contractually prohibited from transferring any of these shares for

three years, or until October 18, 2003.

      Aware that he would be unable to make his billable targets alone, Dr.

Rausser enlisted plaintiffs’ aid. The parties ultimately agreed orally that, if

plaintiffs joined CRA and assisted Dr. Rausser in meeting his billing targets, he

would share certain benefits associated with his stock purchase agreements with

them. This agreement was memorialized in a letter sent by Dr. Rausser to Drs.

Adams, Kearl and Wiggins on October 27, 2000. Dr. Rausser wrote: “This is to

confirm our agreement regarding the division of the 225,479 shares” of CRA

stock and that “we will have until November 29, 2003 to satisfy the following

conditions.” Aplt. App. at 690, 3813-14. The letter went on to state:

      We are at risk with respect to the value of this stock; if we fail to
      achieve the triggering event we capture any positive share value
      (defined as a shares value above $11.0875) and suffer a loss if the share
      value after November 29, 2003 is below $11.0875. I presume this is a
      risk each of you are prepared to share with me.

Id. at 3814.

      1
         Rule 144 provides, in relevant part, that “[s]ecurities acquired directly or
indirectly from the issuer, or from an affiliate of the issuer, in a transaction or
chain of transactions not involving any public offering” are “restricted securities.”
17 C.F.R. § 230.144.

                                          -5-
      After receipt of the letter, plaintiffs separately and orally reaffirmed their

willingness to share in the risk of price fluctuations, and later affirmed the deal

again in response to a substantively similar letter from Dr. Rausser on May 22,

2001. Apparently confusing the terms of his two stock purchase agreements, in

this second letter, Dr. Rausser mentioned the monetary value of $2 million dollars

in reference to the 225,479 shares of stock. In fact, the $2 million loan covered

the purchase price of the tranche of 180,383 shares, while the 225,479 shares

were purchased using the $2.5 million loan. This discrepancy, however, went

unnoticed by any of the plaintiffs. Indeed, at the time, none knew that Dr.

Rausser had negotiated two stock purchase agreements covering two separate

tranches of stock.

      The first signs of trouble came in 2001. On reading CRA’s annual report,

Dr. Adams discovered that Dr. Rausser had been loaned $4.5 million for the

purchase of stock, rather than the $2 million of which he was aware. Dr. Adams

contacted Dr. Rausser, telling him that “I think we’re entitled to some of that

money.” Aplt. App. at 2384, 2352-54, 2383. Dr. Rausser rejected this request

and Dr. Adams did not notify Drs. Kearl and Wiggins of his discovery until much

later. Id. at 2027, 2090, 2382-84.

      By the latter half of 2003, it became apparent that the billing target

necessary to trigger forgiveness of Dr. Rausser’s loans would not be met by

November 29. Fortunately for all the parties before us, however, CRA’s stock

                                         -6-
price had increased substantially, closing at $31.69 per share on November 29.

Because the loans had to be repaid at the rate of $11.0875 per share, on November

29 it appeared that the parties still stood to gain over $20 a share in value. In

anticipation of this gain, plaintiffs reached out to Dr. Rausser to ascertain how

each party’s share of the total number of billable hours would be calculated.

Significantly, such a calculation required not only a method of allocating to each

individual the percentage of the billable hours for which he would receive credit,

but also required designating the time period (“the measuring period”) over which

each individual’s billable hours would be added up. To that end, plaintiffs sent a

letter to Dr. Rausser dated November 11 in which they proposed a two-year

period over which each party’s contribution to the total billables would be

calculated. Id. at 4248. Dr. Adams separately reiterated the need to decide on the

measuring period in a letter of December 22. Id. at 4199-200. Dr. Adams also

testified, however, to conversations that occurred in 2000 in which the parties had

agreed on a three-year measuring period to be used in the event Dr. Rausser’s

billing target was not met.

      In response to plaintiffs’ activities, Dr. Rausser responded that there was no

contract to share the stock in the event the billables target was not met. To be

sure, his letter indicating a joint risk in the event the billables target was not met

stated that “if we fail to achieve the triggering event we capture any positive

share value . . . and suffer a loss if share value [falls],” Aplt. App. at 3813-14,

                                          -7-
suggesting an agreement to share stock even if the billing target was not met. But

the letter contained no explicit discussion of what would happen, or the

measuring period to be used, in the event the target was not met. This lack of

specificity, Dr. Rausser argued, suggested that no firm contract existed between

the parties. Alternatively, Dr. Rausser claimed that any agreement was only for

the smaller tranche of stock, totaling roughly 180,383. He based this claim on

errors in his own letters, particularly the second letter, in which he referenced a

$2 million loan, an error that he felt should have tipped plaintiffs off that the

agreement could not be for the separate trance of 225,479 shares, for which he

received a $2.5 million loan.

      Complicating matters further, CRA’s stock continued its upward march into

2004, eventually hitting a high of $54.881 in August 2005, before declining to

$43.19 on the date of trial. Over the course of this period, Dr. Rausser began

selling his shares. After seeking and receiving permission from CRA to waive the

restrictions on transfer, Dr. Rausser sold 100,000 shares of stock in the fall of

2003; in February 2004, Dr. Rausser surrendered 73,531 shares to CRA to settle

the $2.5 million loan; between June 14 and October 27, 2004, Dr. Rausser sold

roughly 50,000 more shares at various prices, reducing his holdings to 180,383,

exactly the number of shares tied to the unpaid loan; on November 26, 2004, Dr.

Rausser surrendered to CRA 59,951 shares to settle the smaller loan; and between

January 31, 2004 and April 12, 2006, Dr. Rausser sold roughly another 110,000

                                          -8-
shares at various prices, leaving him with 10,000 shares at the date of trial in

August 2006. Over the entire period, the price Dr. Rausser received for the

shares sold ranged from $31.15 to $54.881. After settling the loan, these sales

netted Dr. Rausser a profit in excess of $12 million.

                                          B

      In February 2004, plaintiffs filed suit in federal district court in Utah,

raising various common law claims. Jurisdiction was premised on diversity, see

28 U.S.C. § 1332, as the amount in controversy exceeded $75,000 and Dr.

Rausser resides in California while plaintiffs hail from Utah and Texas. Distilled,

plaintiffs’ theory of the case was that they had two contracts (or perhaps a single

contract consisting of two agreements) pursuant to which Dr. Rausser was

obligated to share with them both the cash and stock he received from CRA.

More specifically, plaintiffs first contended that they had an agreement (“the

negotiation agreement”) with Dr. Rausser requiring him to act as their fiduciary in

negotiating the joint sale of their practices to CRA, the proceeds of which all four

parties would share; these proceeds would include all of the stock Dr. Rausser

received as well as the $4.75 million cash payment. Second, plaintiffs claimed

that they had an oral agreement (“the stock sharing agreement”) to share, on the

terms outlined in the letters of October 2000 and May 2001, the 225,479 shares of

stock Dr. Rausser received.

                                         -9-
      Prior to trial, the district court dismissed various plaintiffs’ claims and

stayed proceedings on their equitable claims of constructive trust and unjust

enrichment pending the outcome of trial on plaintiffs’ remaining claims for

breach of contract, breach of the covenant of good faith and fair dealing, fraud,

promissory fraud, negligent misrepresentation, and breach of fiduciary duties. At

trial, the court further pruned plaintiffs’ theories, dismissing as a matter of law

plaintiffs’ claim for breach of the covenant of good faith and fair dealing on the

basis that it was redundant to plaintiffs’ breach of contract claim. The court also

held insufficient evidence existed to support a jury verdict in plaintiffs’ favor on

the claims for fraud, promissory fraud, negligent misrepresentation, and breach of

fiduciary duties.

      That left plaintiffs with their contract claim. And under that cause of

action, the district court, in effect, modified plaintiffs’ theory of the case by

allowing the jury to consider the existence of a single agreement for both tranches

of stock Dr. Rausser received, rather than two separate agreements. Specifically,

the court ruled that the jury could not consider whether plaintiffs were entitled to

a share of the $4.75 million cash payments. In so doing, the court rejected the

bulk of plaintiffs’ negotiation agreement claim. Citing undisputed evidence that

plaintiffs had individually negotiated parts of their deals with CRA and had

received individual cash bonuses they did not contemplate sharing, the court held

that there was no evidence to support a finding of a sale of a joint enterprise or an

                                         - 10 -
agreement to pool the cash bonuses each party received. As a matter of law, the

court concluded, the evidence would only support a contract to share in stock.

Significantly, though, the court ruled that a jury might reasonably conclude that

the parties did agree to share in all of the stock Dr. Rausser received, rather than

in the lesser number of shares discussed in his letters.

      During trial, plaintiffs were permitted, over Dr. Rausser’s objection, to

introduce a damages calculation based on, among other things, the value of CRA

stock on the various dates that Dr. Rausser sold the stock, rather than on the date

of breach. Likewise, the district court denied Dr. Rausser’s request to instruct the

jury that damages in a contract action must be assessed as of the date of breach.

After an eleven day trial, the jury ultimately returned a verdict in plaintiffs’ favor

totaling roughly $5.2 million. The district court denied Dr. Rausser’s post-trial

motions and both parties now appeal.

                                           II

      At the outset, we pause to address a question implicating our appellate

jurisdiction. Generally, our jurisdiction extends only to “final decisions” of the

district court, 28 U.S.C. § 1291, where a “final decision” must be one that

disposes of all the claims before the district court, Jackson v. Volvo Trucks N.

Am., Inc., 462 F.3d 1234, 1238 (10th Cir. 2006). Thus, on its surface, the district

court’s judgment might not seem “final” because it left unresolved plaintiffs’

equitable claims for constructive trust and unjust enrichment which were stayed

                                         - 11 -
pending resolution of plaintiffs’ legal claims. The Federal Rules of Civil

Procedure, however, create an exception to the general rule of complete finality;

Fed. R. Civ. P. 54(b) permits a district court to certify as final a judgment that

resolves “fewer than all” of the claims before it, provided that the district court

“expressly determines that there is no just reason for delay.”

      In its judgment, the district court clearly announced its intention to certify

its partial judgment as final within the meaning of Rule 54(b), stating that “the

court determines that there is no just reason for delay and directs the entry of this

Judgment as a final judgment . . . .” Aplt. App. at 820. We have held, however,

that “courts entering a Rule 54(b) certification should clearly articulate their

reasons and make careful statements based on the record supporting their

determination of ‘finality’ and ‘no just reason for delay’ so that we [can] review a

54(b) order more intelligently[] and thus avoid jurisdictional remands.”

Stockman’s Water Co. v. Vaca Partners, L.P., 425 F.3d 1263, 1265 (10th Cir.

2005) (alterations in original) (internal quotation marks omitted). Provided that

the district court offers an explanation that we may review, its ultimate decision

“merits substantial deference and should not be disturbed unless [it] was clearly

erroneous.” Id. Because the district court’s statement in its judgment did not

offer detailed reasons for its decision to certify its judgment as final within the

meaning of Rule 54(b), we issued an order on February 6, 2007 directing Dr.

Rausser to “file with this court a copy of a district court order either articulating

                                         - 12 -
its reasons for granting the Rule 54(b) certification or entering judgment.” The

district court responded with a second order explaining that it had stayed

consideration of plaintiffs’ equitable claims pending resolution of their legal

claims, because Utah law allows for equitable remedies only if legal remedies

prove inadequate. Aplt. App. at 1761. Resolution of this appeal is thus necessary

to determine whether plaintiffs can pursue their equitable remedies. Id. We find

nothing clearly erroneous about this explanation, and so conclude, as all parties

before us seem to have conceded, that we have jurisdiction over this appeal.

                                         III

      Faced with the merits, we turn first to Dr. Rausser’s arguments on appeal

before reaching plaintiffs’ cross-appeal. Dr. Rausser’s appeal can be understood

to suggest four broad categories of error, all of which we assess under Utah law,

which the parties agree controls their diversity dispute. 2 We assess each of Dr.

      2
         The choice of law decision in a diversity case is governed by the law of
the forum state in which the federal district court sits. See Salt Lake Tribune
Publishing Co. v. Management Planning, Inc., 390 F.3d 684, 692 (10th Cir.
2004). The parties’ agreement on this score appears to turn on the fact that the
alleged contract was to be performed in substantial part, and that two of the
plaintiffs reside, in Utah. Id. at 693 (noting Utah’s choice of law provisions
requires looking at, inter alia, the place of performance and residence of the
parties). In any event, “[u]nlike jurisdictional issues, courts need not address
choice of law issues sua sponte.” Flying J Inc. v. Comdata Network, Inc., 405
F.3d 821, 831 n.4 (10th Cir. 2005) (citing In re Korean Air Lines Disaster, 932
F.3d 1475, 1495 (D.C. Cir. 1991)).

                                        - 13 -
Rausser’s arguments in turn, ultimately concluding that only his final one, related

to plaintiffs’ damages theory, warrants reversal.

                                           A

      Dr. Rausser’s first contention on appeal is that no reasonable jury could

find as a matter of law a contract for more than 225,479 shares of stock. He

reasons that no jury could reasonably believe that the stock sharing agreement

was for both tranches of stock – roughly 405,000 shares – because his letter of

October 27, 2000 referenced only one tranche of stock, the one consisting of

roughly 225,000 shares, and plaintiffs testified at trial and stipulated in the

pretrial order that it was their understanding that the stock sharing agreement was

limited to 225,000 shares. Dr. Rausser would have it that the only question

properly before the jury, after concluding that there was a stock-sharing

agreement, was whether the amount at issue was the first or second tranche of

stock. In his view, any agreement simply could not encompass both. Our review

of this claim, and of all Dr. Rausser’s claims raised in his motion for judgment as

a matter of law (“JMOL”), is de novo, but we are confined to assessing the legal

adequacy of the judgment only, taking the evidence in the light most favorable to

plaintiffs as the non-moving party and drawing all inferences in their favor.

Williams v. W.D. Sports, N.M., Inc., 497 F.3d 1079, 1086 (10th Cir. 2007).

      Dr. Rausser’s argument fails precisely because it rests on a contested and

contestable view of the facts. Viewing the facts in the light most favorable to

                                         - 14 -
plaintiffs, there is indeed evidence to suggest that the parties entered into an

agreement pursuant to which they would share in the entirety of the stock

incentive package Dr. Rausser negotiated with CRA, rather than in any specific

amount of stock. Dr. Adams testified, for example, that Dr. Rausser told him

“that he would negotiate a performance target or an earnout that would be shared

amongst us proportional to our billings at C.R.A.” Testimony of Dr. Adams,

Aplt. App. at 2312. Similarly, Dr. Wiggins testified that Dr. Rausser told him

that the incentive package to be shared consisted of “a very sizable tranche of

stock [but] I don’t believe he at that time indicated the precise number of shares.”

Testimony of Dr. Wiggins, id. at 1979. And Dr. Kearl testified that it was “clear

that it [the incentive package] was identified with stock . . . we knew that [Dr.

Rausser] was negotiating a final deal on [the stock package]. . . . [Dr. Adams]

and I were following the stock price because we knew that this compensation

package was tied to stock.” Testimony of Dr. Kearl, id. at 2714.

      Dr. Rausser cites to portions of plaintiffs’ testimony in which they express

the view that they were entitled to 225,479 shares as a result of the stock sharing

agreement. By way of example, Dr. Rausser highlights the testimony of Dr.

Adams, in which he testified that “he [Dr. Rausser] disclosed to us in 2000 were

[sic] what is called the stock sharing agreement, the 225,000 some odd shares.”

Testimony of Dr. Adams, id. at 2390. But this testimony can support either of

two inferences: that the contract was for only 225,000 shares of stock, or that the

                                         - 15 -
contract was for all of the stock Dr. Rausser received and Dr. Rausser failed to

disclose the full number of shares CRA gave him. Indeed, until discovery in this

case, plaintiffs had only Dr. Rausser’s representations in the October 2000 and

May 2001 letter (referencing 225,479 shares) regarding how much stock he

received from CRA on which to base their view of how much stock they were

entitled to share. See Testimony of Dr. Wiggins, id. at 2090 (“I didn’t know

about [the second tranche of stock] until after the document production in this

case.”). Plaintiffs themselves repeatedly stated that they believed their agreement

with Dr. Rausser encompassed all stock received from CRA. And CRA’s chief

executive officer testified that he understood that Dr. Rausser would be making

“at least some payments out of one or more of those tranches” of stock to people

who would help him meet his billable targets. Aplt. App. at 2664-65 (emphasis

added).

      Critically, too, no party before us has ever claimed the letter on which Dr.

Rausser seeks to found his JMOL claim was a contract itself. Very much to the

contrary, counsel for Dr. Rausser explicitly stated that it was not, responding

during the conference on jury instructions to plaintiffs’ counsel’s statement that

“this [the letter] is not the defining document,” by saying “[w]e would agree.”

Aplt. App. at 3623. This concession – leaving open, as it does, the possibility

that the precise number of shares (225,479) was not a contract term – coupled

with plaintiffs’ testimony, is ample support for the inference that the oral contract

                                        - 16 -
entered into by the parties encompassed all the stock received by Dr. Rausser, and

the letters misstated or misrepresented that number. 3 Simply put, while we agree

with Dr. Rausser the evidence he cites might support an inference that the parties’

agreement was limited to one tranche of stock, that is not the question before us.

Our job is to ask whether a reasonable jury could have found as it did, not

whether it might have reasonably found otherwise. And there does exist

sufficient evidence in the record before us to sustain the jury’s conclusion about

the scope of the parties’ agreement.

      Dr. Rausser’s claim that plaintiffs stipulated in the pretrial order that the

parties’ stock-sharing agreement encompassed only 225,000 shares of stock has

more bite but ultimately fails as well. The pretrial order does indeed appear to

contain a stipulation that the stock-sharing agreement was for only 225,000 shares

of stock. See Aplt. App. at 678-79. While this stipulation might have been

binding on plaintiffs, it is well-settled that the court may exercise its discretion to

amend pretrial orders to conform to the evidence presented at trial, particularly

      3
         Dr. Rausser also argues that the parol evidence rule bars any evidence
that plaintiffs intended to share in the entire 405,000 shares of stock. However,
the parol evidence rule operates to exclude extrinsic evidence offered to vary the
terms of an integrated contract, which Utah defines as “a writing or writings
constituting a final expression of one or more terms of an agreement.” Tangren
Family Trust v. Tangren, 182 P.3d 326, 330 (Utah 2008). Because the parties
concede that the letter was not the contract, the parol evidence rule has no
application, and in any event, Dr. Rausser concedes that this argument was not
raised below, Op. Br. at 38, and we therefore find it waived.

                                         - 17 -
where it does so without objection. Monod v. Futura, Inc., 415 F.2d 1170, 1173-

74 (10th Cir. 1969). And here it was the district court, not plaintiffs, that

amended the pretrial order to conform to the proof admitted during the course of

trial. See supra Part I.A. In fact, it did so in response to Dr. Rausser’s JMOL

motion. The court ruled that, as a matter of law, the contract at issue was only for

stock – thus determining that the jury could not consider the $4.75 million

plaintiffs sought only in connection with the negotiation agreement. At the same

time, the court explicitly ruled that the jury could consider whether the contract

was for all 405,000 shares of stock – thus allowing for the possibility that

plaintiffs could be awarded damages based on 180,000 shares of stock plaintiffs

had previously sought only in connection with the negotiation agreement. This

ruling quite reasonably conformed the issues submitted to the jury to match the

evidence adduced at trial – namely, evidence that there was a meeting of the

minds on sharing an incentive package consisting of all the stock Dr. Rausser

received from CRA, but no such meeting of the minds on sharing individual cash

bonuses. Dr. Rausser did not object on estoppel grounds when the district court

first issued this ruling, effectively combining portions of plaintiffs’ two theories

of the case, and neither does he argue before us that the district court erred by

constructively amending the pretrial order. Nor could he persuasively do so:

when the district court explicitly ruled that plaintiffs could argue to the jury that

the stock sharing agreement was for both tranches of stock, counsel for Dr.

                                         - 18 -
Rausser responded by saying “I don’t have a problem responding to [that

argument], it just makes [my closing remarks] a little more lengthy.” Aplt. App.

at 3636. 4

                                          B

       Dr. Rausser separately contends that JMOL is appropriate because there is

no evidence from which the jury could reasonably have inferred a meeting of the

minds on either (1) the measuring period, or (2) the method to be used to

calculate those proportions. But while it is of course the case that “a meeting of

the minds on the integral features of an agreement is essential to the formation of

a contract,” Neilsen v. Gold’s Gym, 78 P.3d 600, 602 (Utah 2003), we have little

trouble concluding in this case that there was sufficient evidence to permit the

jury’s inference of a meeting of the minds on both of these points. 5

       4
         For similar reasons, we reject both Dr. Rausser’s contention that he is
entitled to JMOL on the basis that there was no meeting of the minds on sharing
in 405,000 shares and his argument that he is entitled to a new trial because a jury
verdict based on 405,000 shares is against the great weight of the evidence. The
record contains sufficient evidence to permit a jury to reasonably infer a meeting
of the minds on sharing in the entire lot of stock, however many shares that may
have been, and the district court did not abuse its discretion in determining that
such an inference is not against the great weight of the evidence.
       5
          Dr. Rausser also argues that he is entitled to JMOL because any oral
contract is barred by the statute of frauds, which requires that oral contracts be
capable of completion within a single year. Pasquin v. Pasquin, 988 P.2d 1 (Utah
Ct. App. 1999). This argument fails, however, because in Utah the one-year
limitation imposed by the statute of frauds “applies only to contracts that are
literally incapable of being performed within one year.” Id. at 6. Here, Dr.
Rausser concedes that it was possible for the stock-sharing agreement to be
                                                                        (continued...)

                                        - 19 -
      (1) With respect to the measuring period, the jury heard testimony about a

conversation in September 2000 in which Dr. Adams and Dr. Rausser agreed on a

three-year measuring period in the event – which came to pass – that the billable

hours target was not met. Testimony of Dr. Adams, Aplt. App. at 2326-28, 2470.

The jury also heard testimony about a conversation between Dr. Wiggins and Dr.

Rausser to the same effect in October 2000. Testimony of Dr. Wiggins, id. at

2002. Based on these conversations, a jury could reasonably infer the existence

of an agreement, particularly in light of the fact that Dr. Kearl testified that he

left negotiation of the measuring period to Dr. Adams. Testimony of Dr. Kearl,

id. at 2789-93.

      Dr. Rausser argues that he is entitled to JMOL primarily by pointing to

evidence supporting his position that there was no meeting of the minds, rather

than pointing to a lack of evidence indicating a meeting of the minds. For

example, he points to some correspondence dating from 2003 in which plaintiffs

      5
        (...continued)
performed within twelve months from the time he accepted his offer to join CRA
– by its express terms, the billings target could be met in any twelve month period
and the stock could be distributed once that target was met. Therefore, if Dr.
Rausser could have accepted his deal with CRA on the same day the stock-sharing
agreement was formed, the latter would be capable of performance within twelve
months. Dr. Rausser has offered no reason to think that he could not have
accepted his offer in September 2000 rather than October, so the fact that this
eventuality ended up occurring a month after the formation of the stock-sharing
agreement is irrelevant. It was, at the time the stock-sharing agreement was
formed, possible for it to be performed within one year, however unlikely, and
that is all the law requires.

                                         - 20 -
sought to negotiate a two-year measuring period, and notes that the October 2000

letter itself only made provision for a one-year measuring period in the event the

billables target was met, but was silent on the measuring period in the event it

was not. But, again, our role is not to pick and choose between competing facts

and trial narratives. There is evidence in the record before us to support the

jury’s conclusion that the parties reached an agreement on a measuring period in

2000, and to infer that subsequent efforts to generate agreement on a two-year

measuring period were efforts at renegotiating, rather than completing, the

contract. More than that we are not free to demand in assessing a JMOL motion.

      (2) For substantively the same reasons, Dr. Rausser’s challenge to the

method used to calculate the proportion of stock each party was to receive fails.

Dr. Rausser appears to concede that each individual was to receive stock in

proportion to his contribution to the total billable hours achieved by the group; he

simply disputes that there was evidence of a meeting of the minds on the method

to be used to calculate each party’s proportionate contribution. Dr. Rausser

suggests that there are two ways to calculate such figures – using “Source Labor

Revenue” and “Collected Labor Revenue” – and without an explicit agreement on

which was to be used no contract is possible. 6 Plaintiffs, however, cite the

      6
         Under Collected Labor Revenue, two parties jointly responsible for
bringing in a particular project each received credit for the total number of
billable hours generated on the project, resulting in the same billable hour being
                                                                       (continued...)

                                        - 21 -
testimony of a CRA representative, Dr. Cooper, who testified to a conversation he

had with Dr. Rausser in 2000, in which Dr. Rausser informed Dr. Cooper that he

had reached an agreement with plaintiffs to share in the stock in proportion to the

parties’ shares of billings as calculated by a method known as “NCCR,”

Testimony of Dr. Cooper, Aplt. App. at 2607-09, which stands for “net collected

CRA revenue” and was also referred to as “collected CRA labor revenue,” id. at

2624. Plaintiffs assert that, based on this testimony, a jury could reasonably have

inferred that Dr. Rausser had agreed in 2000 to share the stock in proportion to

each party’s “Collected Labor Revenue.” We agree that this inference is

plausible and, accordingly, we cannot say that Dr. Rausser is entitled to JMOL. 7

                                          C

      Dr. Rausser contends that he is entitled to a new trial because plaintiffs

were allowed in their closing argument to argue a series of claims not properly

before the jury, including misrepresentation, reliance, the existence of a contract

to share in 405,000 shares, and the existence of an obligation to negotiate on

      6
        (...continued)
attributed to multiple parties. Aplt. App. at 2955-56. By contrast, under Source
Labor Revenue each party responsible for bringing a project to CRA was credited
with only a proportion of the total billables generated on the project, where the
proportion reflected an allocation of responsibility for bringing in, or “sourcing,”
the work. Id.
      7
         Dr. Rausser might possibly be understood to argue that he is entitled to a
new trial because the jury’s verdict on these points is against the great weight of
the evidence. To the extent he does, however, we disagree for substantively the
same reasons we reject his argument as to JMOL.

                                        - 22 -
plaintiffs’ behalf. When properly presented to the district court, our review of the

district court’s denial of a new trial is only for an abuse of discretion. See, e.g.,

King v. PA Consulting Group, Inc., 485 F.3d 577, 591 (10th Cir. 2007). Under

this standard, we “will not reverse” on the basis of “an improper argument unless

it obviously prejudice[d] one of the parties.” Id.

      We cannot agree with Dr. Rausser that reversal is warranted under this

standard. A review of the challenged portions of the closing argument indicates

that counsel was explaining why the 225,000 shares listed in the letter did not

constitute the entire package of stock to which plaintiffs were entitled. As we

have noted already, however, a jury could reasonably infer that the contract was

for 405,000 shares. In this light, it is clear that counsel’s arguments about

“misrepresentation” and “reliance” were not an attempt to argue dismissed claims,

but an effort to explain the discontinuity between the October 2000 letter and the

number of shares of stock plaintiffs claimed were part of the stock sharing

agreement. For example, Dr. Rausser takes exception to the statement that “He

[Dr. Rausser] made promises, and he didn’t live up to those promises.” Aplt.

App. at 3640. Fairly viewed, however, this is simply one way of asserting that

Dr. Rausser breached his obligations under the contract. A contract, after all, is

nothing but an “exchange of promises.” See Restatement (Second) of Contracts

§ 231 (1979). Similarly, Dr. Rausser is displeased with the statements that “[m]y

clients didn’t know the number of shares. He [Dr. Rausser] told them there would

                                         - 23 -
be several hundred thousand shares. Then he documents this portion of it in this

agreement, and he puts down 225,479 shares.” Aplt. App. at 3747. But such an

argument simply offers an explanation to the jury why the shares discussed in the

letter do not match the total number of shares plaintiffs sought to argue were

covered by the contract – suggesting a mistake on the part of Dr. Rausser,

whether deliberate or otherwise.

      We also do not think the district court abused its discretion in denying Dr.

Rausser’s motion on the ground that plaintiffs mentioned during closing argument

Dr. Rausser’s negotiations with CRA. The question before the jury was whether

Dr. Rausser had agreed to share with plaintiffs a stock package that he negotiated

for and obtained from CRA. Viewed in this light, it hardly seems remarkable that

plaintiffs’ closing argument referred to Dr. Rausser’s negotiations with CRA. Dr.

Rausser nevertheless argues that the jury was confused by references to

negotiations because the bulk of the “negotiation agreement” had been dismissed,

and that the possibility of jury confusion on this score warrants a new trial. The

difficulty with this argument is that our standard of review will only permit

reversal if any improper argument “obviously prejudice[d]” Dr. Rausser. King,
485 F.3d at 591. Dr. Rausser has pointed us to no evidence that plaintiffs’

argument prejudiced him, much less obviously so. Indeed, Dr. Rausser’s central

contention on damages, which we discuss below, is that the jury’s damages award

was based purely on the prices at which Dr. Rausser sold the stock, not that it

                                        - 24 -
included any portion of the $4.75 million sought only in connection with the

negotiation agreement. Given this, we are unable to see what prejudice Dr.

Rausser suffered from plaintiffs’ argument.

                                            D

      Turning finally to the question of damages, Dr. Rausser raises various

claims of error, one of which we find merits discussion and is, in fact, persuasive.

The district court rightly instructed the jury that if it found a plaintiff entitled to

damages, it should award damages that “would fairly compensate that plaintiff by

putting him in the same position he would have been in had the defendant fully

performed.” Jury Inst. 27, Aplt. App. at 795. The court further and again quite

correctly instructed the jury that the award must be based on the evidence and

must be reasonably certain and not speculative. However, as he did before the

district court, Dr. Rausser complains before us that the jury received no

instruction about the need for determining a date on which the contract was

breached, and no instructions on the date(s) on which the stock was to be valued

for purposes of calculating damages. Indeed, he stresses, plaintiffs were

permitted to seek, and the jury was allowed to find, damages completely without

reference to the date of breach. Dr. Rausser argues, and we agree, that this was

legal error.

      We review the jury instructions as a whole de novo, with an eye toward

whether they adequately informed the jury of the governing law. Gunnell v. Utah

                                          - 25 -
Valley State Coll., 152 F.3d 1253, 1259 (10th Cir. 1998). Under Utah law, the

general rule is that the date the defendant breaches his contractual obligation to

deliver stock is the date on which damages are measured. Coombs & Co. of

Ogden v. Reed, 303 P.2d 1097, 1099 (Utah 1956). Under this rule and in a case

such as this one in which the market price of the goods in question is easily

ascertainable, the date of breach is not only central to the calculation of damages,

but is often the only real issue for the jury to decide on damages. After the date

of breach has been determined, calculating damages frequently becomes a simple

math problem. The importance of the date of breach in a contract action is

highlighted by the distinction between damages in tort versus contract. The goal

of damages in the tort context is to “compensate a plaintiff for actual loss.”

Scully v. US WATS, Inc., 238 F.3d 497, 509 (3d Cir. 2001). In contract, on the

other hand, the goal is not to compensate for the actual loss that may have

occurred, but instead to compensate the party for its expected gain, measured at

the time of contracting, from anticipated full performance. Shoels v. Klebold, 375
F.3d 1054, 1068 (10th Cir. 2004). Admittedly, in cases of lost profits the

practical distinction between these two concepts may be limited. See Huffman v.

Saul Holding Ltd. P’ship, 194 F.3d 1072, 1083 (10th Cir. 1999) (noting that lost

profits in a breach of contract action “frequently represents fulfillment of the non-

breaching party’s expectation interest”) (citation omitted). But the analytic

distinction between measuring damages based on an ex ante expectation versus an

                                        - 26 -
ex post actual loss counsels hesitation in allowing a jury to consider evidence and

award damages without any guidance as to temporal limitations on the

defendant’s liability.

      The district court’s instructions erroneously permitted plaintiffs to pursue a

damages theory at trial that had no connection whatsoever to the date of breach.

Instead of seeking to measure their losses as of the date of Dr. Rausser’s breach,

plaintiffs were free under the jury instructions given to argue for damages

months and even years after any possible breach date. Indeed, plaintiffs’ damages

theory valued the stock as of the dates of Dr. Rausser’s sales and, for the stock he

retained, the date of trial. As the Utah Supreme Court has explained, the

difficulty with this approach is that it “allow[s] a plaintiff to ride the stock

market at the defendant’s risk and expense until trial [or until the defendant sold],

which might not take place until years [later],” in effect transforming defendant

into a surety against any intervening loss of value unrelated to the transactions at

issue in the case at hand. Broadwater v. Old Republic Sur., 854 P.2d 527, 531

(Utah 1993). While such a measure of damages was once regularly utilized in the

tort context, even in that context Utah no longer adopts this free-form approach to

damages. Id.

      Though the date of breach is an essential starting point for assessing

contract damages under Utah law, we acknowledge it may not be the end point for

two related reasons. First, drawing on Utah’s then-existing version of the

                                         - 27 -
Uniform Sales Act, the Coombs court acknowledged that the rule it set down was

not a hard and fast rule, but applied only “in the absence of special circumstances

showing proximate damages of a greater amount.” Coombs, 303 P.2d at 1097-98

(internal quotations omitted). Second, such special circumstances may exist here;

both parties note that a number of jurisdictions have applied the so-called “New

York” rule of damages to actions involving, as this case does, a breach of contract

to deliver stock, and it is at least possible Utah would do the same. 8

      Under the New York rule, damages are based on the “highest intermediate

value of the stock between the time of [breach] and a reasonable time after the

owner receives notice of [breach].” Broadwater, 854 P.2d at 531. This rule gives

an aggrieved buyer an opportunity to consult counsel, find and employ a new

broker, and assess the market to determine whether covering in the market –

buying the product in question from a different broker – is advisable at prevailing

      8
         See, e.g., Forsythe v. Hales, 255 F.3d 487, 492 (8th Cir. 2001); Schultz v.
Commodity Futures Trading Comm’n., 716 F.2d 136, 141 (2d Cir. 1983) (noting
that many courts have followed the Supreme Court in Galigher v. Jones, 129 U.S.
193 (1889), by applying the New York rule “where stock or properties of like
character were converted, not delivered according to contractual or other legal
obligation, or otherwise improperly manipulated”); Payne v. Wood, 62 F.3d 1418
(6th Cir. 1995) (unpublished table decision) (discussing and citing Michigan law
applying the New York rule to breach of contract cases); Burns v. Prudential Sec.,
Inc., 857 N.E.2d 621, 638 (Ohio Ct. App. 2006). But see Lucente v. IBM Corp.,
310 F.3d 243, 262 (2d Cir. 2002) (holding that the New York rule does not apply
in breach of contract cases); Scully, 238 F.3d at 510 (same). Perhaps somewhat
ironically, New York itself appears not to be among the states that apply the New
York rule in the breach of contract context. See Lucente, 310 F.3d at 262.

                                         - 28 -
market prices. Burns, 857 N.E.2d at 640. Further, the New York rule allows for

the possibility that a buyer may not have the funds available to purchase stock at

a market price significantly higher than the contract price, and so may need time

to raise funds if he does elect to cover. Id. This last concern may have particular

relevance where, as here, a court is confronted with a contract exchanging

services for a good that fluctuates significantly in value – such as stock.

      It is not clear, however, that Utah would go so far as adopting the New

York rule in contract cases. On the one hand, a case such as this one – in which

services are exchanged for stock of substantial value – exposes a discontinuity

between the standard notion of expectation damages, with its goal of making a

plaintiff whole, and damages measured on the date of breach. On the other hand,

to date Utah has only adopted the New York rule in tort cases, most notably the

conversion context for which that rule was originally conceived. See Broadwater,
854 P.2d at 531; Ockey v. Lehmer, 189 P.3d 51, 62 (Utah 2008). And at least

some courts have suggested that its introduction into the contract realm would be

inappropriate, risking the possibility of rewarding a plaintiff for actions taken

with the benefit of hindsight, rather than simply replacing his or her expectation

at the time of contracting. Scully, 238 F.3d at 510; see also Lucente, 310 F.3d at

262. The New York rule also injects a certain amount of uncertainty by requiring

speculation as to the meaning of a “reasonable period” to cover. Scully, 238 F.3d

at 510.

                                        - 29 -
      However much play in the joints Utah may allow in the date on which stock

is valued in a breach of contract action – whether it would require a

straightforward date of breach theory or adopt the New York rule – one thing is

clear. Under either approach, determining the date of breach is the essential

starting point. Under the general rule set out in Coombs, of course, the date of

breach is also the ending point. But even under the New York rule, the date of

breach is crucial because it is from that day that the reasonable period to cover is

measured. Without a date of breach, in other words, the jury has no way to think

about how much time a plaintiff may reasonably take before being expected to

enter the market, and thus no way of determining the “highest intermediate price”

between the date of breach and the end of that period.

      In light of our holding with respect to the correct measure of damages, we

are also compelled to agree with Dr. Rausser that the district court abused its

discretion in admitting into evidence share prices on the date on which Dr.

Rausser actually sold stock. United States v. Mares, 441 F.3d 1152, 1156 (10th

Cir. 2006) (decisions to admit evidence are reviewed for abuse of discretion).

Under any cognizable theory of contract damages, these dates are legally

irrelevant. Plaintiffs’ only argument in defense of these dates is that a jury could

reasonably have found a breach each time Dr. Rausser sold shares, but such a

theory finds support neither in the general rule set out in Coombs nor the New

York rule Utah has adopted in the conversion context. Dr. Rausser breached his

                                        - 30 -
contractual obligation on whatever date delivery of the stock to plaintiffs was

due, and plaintiffs have made no showing that delivery was due, purely

coincidentally, on the dates Dr. Rausser elected to sell his shares; neither have

they shown that the prices on those dates correspond to a reasonable period in

which plaintiffs could cover. Simply put, the admission of these dates rested on a

legally erroneous concept of permissible contract damages.

      On remand, there are two possibilities. The first is a new trial on damages.

Any such new trial would, consistent with our holding above, require damages to

be measured by reference to the date of breach. Whether that would be the end

point of the analysis (per Coombs), or only the starting point (per the New York

rule), remains an open question. We leave that question open in significant

measure because the choice between these two rules has not been sufficiently

briefed on appeal to allow us to predict which rule Utah would adopt. The district

court, accordingly, would either need briefing on which of these two damages

remedies is proper under Utah law, or it would need to certify the question to the

Utah Supreme Court, in accordance with Utah R. App. P. 41.

      Alternatively, plaintiffs may, at their option, choose to accept a remittitur

of damages based on the price of CRA stock on November 29, 2003 under a

straightforward date-of-breach damages analysis. There was evidence adduced at

trial to support a finding that breach occurred on November 29 (which is not to

say that as a matter of law breach occurred on that date). It was on that date that

                                        - 31 -
the parties’ venture was complete; they knew whether the CRA loans needed to be

repaid, and on that date the period for measuring each party’s contribution to the

billables was concluded. Moreover, Dr. Rausser has maintained throughout this

litigation that as a matter of law the date of breach is November 29. On remand,

he therefore is estopped from asserting a different date of breach. If the plaintiffs

do accept a remittitur to damages based on the share price on November 29, such

a damages award would use the proportions of stock the jury awarded to each

plaintiff, and merely multiply that number by $31.69. 9

                                          IV

      From Dr. Rausser’s appeal we turn to plaintiffs’ three arguments on cross-

appeal. We affirm the district court on each score, if sometimes for reasons

slightly different from those it gave. Griffith v. State of Colo., Div. Of Youth

Servs., 17 F.3d 1323, 1328 (10th Cir. 1994) (“We may affirm on any ground

adequately presented to the district court, or on a ground not raised in the district

      9
         Because we find that the district court committed reversible error in
instructing the jury, we do not reach Dr. Rausser’s argument that the jury’s
verdict was excessive or against the great weight of the evidence. Neither do we
hold that the district court necessarily abused its discretion in failing to ask for
the date of breach on the special verdict form, although given the centrality of the
date of breach under any measure of damages the district court on remand may
well be advised to include such a question on the special verdict form. Finally,
we also do not hold that the district court necessarily abused its discretion in
declining to give Dr. Rausser’s proffered instruction that damages must be
measured on the date of breach. As we have said, we do not today determine
whether damages should be measured according to the date-of-breach rule set out
in Coombs or the New York rule.

                                        - 32 -
court provided that the record is sufficiently clear [and] both parties had an

adequate opportunity to develop the record on the issue.”).

                                           A

      Plaintiffs first argue that the jury should have been allowed to consider

their second contract claim, the so-called negotiation agreement claim. More

specifically, given the district court’s decision to allow plaintiffs to pursue all the

stock sought in connection with the negotiation agreement, they claim they should

also have been allowed to argue that they were entitled to a proportionate share of

the $4.75 million cash payment Dr. Rausser received pursuant to an Asset

Purchase Agreement.

      Like the district court, however, we find that no reasonable jury could have

inferred a meeting of the minds on sharing cash bonuses. The only evidence

plaintiffs cite for this expansive understanding of the composition of the shared

incentive package is their own testimony that they understood the contract in

question to be for all the compensation received by Dr. Rausser. Such testimony

is, of course, competent evidence from which a jury could infer that plaintiffs so

believed. But it does not answer the question whether there was a contractual

obligation to pool compensation. For a jury to infer a contractual obligation,

there would have to be evidence sufficient for the jury to infer a meeting of the

minds on sharing total compensation; in other words, there would have to be some

evidence supporting the notion that Dr. Rausser so understood their agreement.

                                         - 33 -
See Manchester Pipeline Corp. v. Peoples Natural Gas Co., 862 F.2d 1439, 1444

(10th Cir. 1988). With respect to the stock sharing agreement, Dr. Rausser’s own

letters provided some evidence of his thinking, as did the various conversations

plaintiffs testified to having with Dr. Rausser. The letter and the conversations

provided a basis for inferring that Dr. Rausser, and not only plaintiffs, understood

that the parties would share in the stock Dr. Rausser received from CRA. By

contrast, with respect to pooling cash bonuses, plaintiffs have identified no such

evidence going to Dr. Rausser’s understanding of their agreement, and our review

of the record has turned up none. Indeed, in no small amount of tension with

their claim of an agreement to pool cash compensation as well as stock, plaintiffs

consistently testified that they expected the cash bonuses to be paid to each

individual “directly” and retained by that individual, Testimony of Dr. Wiggins,

id. at 1978; Testimony of Dr. Kearl, id. at 2807-08, and that they expected to

share in an “incentive package” consisting of “a very sizeable tranche of stock,”

Testimony of Dr. Wiggins, id. at 1978-79. The major point of disagreement or

surprise, from plaintiffs’ point of view, seems to have been the size of Dr.

Rausser’s cash bonus relative to their bonuses. Testimony of Dr. Wiggins, id. at

2025-27; Testimony of Dr. Kearl, id. at 2807-08. But the fact that the size of Dr.

Rausser’s cash bonus surprised plaintiffs is not evidence of a meeting of the

minds on a right to share it.

                                        - 34 -
                                           B

      We also affirm the district court’s decision to grant Dr. Rausser JMOL on

plaintiffs’ claim for a breach of the covenant of good faith and fair dealing.

Under Utah law the covenant of good faith and fair dealing is implied into all

contracts and creates a duty not to do intentionally “anything to injure the other

party’s right to receive the benefits of the contract.” Eggett v. Wasatch Energy

Corp., 94 P.3d 193, 197 (Utah 2004). A breach of the implied covenant is a

breach of the contract, but Utah law appears to recognize, at least as a conceptual

possibility, that a breach of the implied covenant and a breach of an express

covenant of the underlying contract may implicate different damages. Id. at 199

(noting that breach of express contractual provisions and breach of covenant of

good faith “[a]re separate claims. Recovery under one claim is not limited by or

tied to recovery under the other claim.”). Similarly, a plaintiff may not

demonstrate a breach of the implied covenant of good faith simply by showing a

breach of an express covenant. Instead, a plaintiff must prove breach of the

implied covenant through evidence showing an intentional effort to “injure the

other party’s right to receive the benefits of the contract.” Id. at 197.

      Plaintiffs’ proposed jury instruction on the breach of the good faith

covenant claim provided:

      [Plaintiffs’] next claim contends that Dr. Rausser breached the implied
      covenant of good faith and fair dealing in their agreements by (a)
      failing to negotiate a deal with CRA that fairly compensated [plaintiffs]

                                         - 35 -
      . . . and/or (b) by negotiating a deal with CRA that unfairly benefitted
      Dr. Rausser at the expense of [plaintiffs].

Appellee’s Suppl. App. at 1. 10 By its terms, then, plaintiffs alleged bad faith by

Dr. Rausser only with respect to a responsibility to negotiate a compensation

package on their behalf. And as we have already said, plaintiffs’ evidence would

only support a finding of a compensation package consisting of stock. See supra

Part IV.A. Plaintiffs’ proffered instruction thus must be examined in this light:

what evidence is there of an agreement to negotiate the stock package on

plaintiffs’ behalf – rather than simply share the package – and what evidence is

there of bad faith with respect to that negotiation?

      Assuming without deciding that the evidence could support a finding of an

obligation to negotiate, rather than simply to share, we see no evidence of bad

faith in Dr. Rausser’s negotiation of the stock package. Indeed, such a contention

would be in tension with plaintiffs’ central claim that there was a contract to

share in the stock. After all, under plaintiffs’ theory of the case, Dr. Rausser

intended to share in the stock package, so there was no reason for him to seek to

limit the number of shares, and the parties agree that the contract to share stock

      10
         Plaintiffs ask that we not consider this jury instruction because Dr.
Rausser “has not shown whether the proposed instruction was part of the record at
trial.” Cross-Appellants’ Reply Br. at 13 n.9. While we will of course grant a
motion to strike a document from the record on appeal that was not properly
before the district court, see Aero-Medical, Inc. v. United States, 23 F.3d 328, 329
n.2 (10th Cir. 1994), plaintiffs’ carefully worded statement does not actually
dispute that the instruction was part of the record below.

                                        - 36 -
was to share stock transferred by CRA to Dr. Rausser, so the fact that the stock

was not passed directly to plaintiffs cannot be the basis for a bad faith claim.

And while plaintiffs might plausibly have brought a bad faith claim with respect

to Dr. Rausser’s retention of stock, and indeed included allegations to that effect

in their complaint, Aplt. App. at 38, they appear not to have pursued that theory

before the district court in opposing JMOL, and in any event have not urged such

a theory on us as a grounds for reversal. 11 Because the contract found by the jury

was limited to stock, and there is no evidence of a breach of the covenant of good

faith in negotiating the stock package, we are constrained to affirm the district

court’s decision to grant JMOL to Dr. Rausser on this claim.

                                          C

      Finally, with respect to plaintiffs’ claims for breach of fiduciary duty,

fraud, promissory fraud, and negligent misrepresentation, on which the district

court granted Dr. Rausser JMOL, plaintiffs’ recovery is barred by the economic

      11
          Plaintiffs have not, for example, argued to us that in negotiating the
stock package, Dr. Rausser acted in bad faith by requesting more of his
compensation in cash (to go to him alone) rather than in stock (to be shared
among the parties), and thus we have no occasion to opine on such a theory.
Plaintiffs only argument with respect to the $4.75 million cash payment is that a
jury might reasonably have found bad faith with respect to Dr. Rausser’s
“negotiating with CRA an Asset Purchase Agreement under which he alone
received the $4.75 million,” Cross-Appellants’ Reply Br. at 14, an argument
going, again, only to a putative (and, as the district court rightly concluded,
unsupported) duty to pool cash bonuses.

                                        - 37 -
loss doctrine. 12 In Utah, the economic loss doctrine provides that “a party

suffering only economic loss from the breach of an express or implied contractual

duty may not assert a tort claim from such a breach absent an independent duty of

care under tort law.” Hermansen v. Tasulis, 48 P.3d 235, 240 (Utah 2002)

(emphasis omitted). The purpose behind this rule is clear: a plaintiff may not

seek double recovery by recasting a contract claim as a tort claim, but must

instead identify separate duties to support both claims. To be sure, relying on

Hermansen, plaintiffs assert the existence of “independent duties” that

purportedly required Dr. Rausser to be honest and avoid misrepresenting his

compensation. But Hermansen hurts rather than helps their cause. In Hermansen,

the court held that the economic loss doctrine did not bar claims for fraud and

negligence by real estate purchasers against a real estate broker and his agent

because the real estate broker and agent had “failed to properly discharge their

professional duties,” duties arising under longstanding principles of tort law and

independent of their contractual obligations. Id. Plaintiffs, by contrast, do not

identify any recognized independent legal duties of care under extant tort law Dr.

Rausser might have owed them. Rather, the only duties plaintiffs claim Dr.

      12
          Plaintiffs claim that Dr. Rausser waived this argument with respect to
the claim for promissory fraud by failing to raise it before either this court or the
district court. On the contrary, however, Dr. Rausser’s brief mentions promissory
fraud twice in the first three sentences of the section of his brief dealing with the
economic loss rule. See Reply Brief at 73-74.

                                        - 38 -
Rausser owed were the product of his contract to share certain shares of stock.

Absent that contract, plaintiffs cite no independent legal obligation requiring Dr.

Rausser to disclose to plaintiffs either his compensation or the total number of

shares CRA awarded him. We therefore affirm the district court’s dismissal of

plaintiffs’ tort claims.

                                         ***

       In the main, we affirm the judgment of the district court. The evidence was

sufficient to support the jury’s determinations that there was a contract to share in

the entire lot of stock CRA gave to Dr. Rausser, and JMOL was properly granted

on the remainder of plaintiffs’ claims. However, we reverse and remand for a

new trial on damages or, at plaintiffs’ election, remittitur to damages calculated

using the proportions of stock awarded by the jury and the price of CRA stock on

November 29, 2003. Plaintiffs failed to identify or base their damages calculation

on a date of breach, consistent with contract principles, and instead asked the jury

to consider share prices irrelevant under any correct theory of contract damages.

If plaintiffs elect a new trial, on remand the district court must consider in the

first instance – either itself or by certifying the question to the Utah Supreme

Court – whether the correct measure of damages for the failure to deliver stock in

Utah is calculated using the value of the stock on the date of breach or the highest

value in a reasonable period following the breach.

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                  Reversed and remanded.

ENTERED FOR THE COURT

Neil M. Gorsuch
Circuit Judge

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