Court Opinion

ID: 5175736
Source: CourtListenerOpinion
Date Created: 2022-01-04 01:00:25.559195+00
Date Added: 2024-06-11T08:26:17.552856
License: Public Domain

Case: 20-20073     Document: 00516151701         Page: 1     Date Filed: 01/03/2022

              United States Court of Appeals                           United States Court of Appeals

                   for the Fifth Circuit                                        Fifth Circuit

                                                                              FILED
                                                                        January 3, 2022

                                  No. 20-20073                           Lyle W. Cayce
                                                                              Clerk

   Ureteknologia de Mexico S.A. de C.V.; Urelift S.A. de
   C.V.,

                                         Plaintiffs—Appellants/Cross-Appellees,

                                       versus

   Uretek (USA), Incorporated,

                                          Defendant—Appellee/Cross-Appellant.

                  Appeal from the United States District Court
                      for the Southern District of Texas
                           USDC No. 4:16-CV-2762

   Before Stewart, Haynes, and Graves, Circuit Judges.
   Per Curiam:*
          This case concerns a breach of contract dispute between Plaintiff-
   Appellant Ureteknologia de Mexico S.A. de C.V. (“UdeM”), Plaintiff-
   Appellant Urelift S.A. de C.V. (“Urelift”), and Defendant-Appellee Uretek
   (USA), Inc. (“Uretek”). Uretek created a ground-stabilization process and

          *
            Pursuant to 5th Circuit Rule 47.5, the court has determined that this
   opinion should not be published and is not precedent except under the limited
   circumstances set forth in 5th Circuit Rule 47.5.4.
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                                     No. 20-20073

   sublicensed that process for UdeM’s exclusive use in Mexico (which UdeM
   subsequently sublicensed to Urelift). Appellants allege that Uretek violated
   this exclusivity agreement, thereby forcing Urelift to accept lower pay on four
   ground-stabilization projects and resulting in Urelift’s failure to secure two
   other projects.
          After a four-day trial, a jury awarded Appellants liquidated damages,
   lost profits on the four completed projects, and lost profits on the two
   unrealized projects. Uretek moved for judgment as a matter of law, which
   the district court partially granted, holding that UdeM was entitled to
   liquidated damages but that Urelift was not entitled to lost profits.
   Accordingly, attorneys’ fees were partially awarded.
          UdeM and Urelift appealed the district court’s denial of lost profits
   and failure to grant full attorneys’ fees. Uretek cross-appealed the district
   court’s grant of liquidated damages and grant of partial attorneys’ fees. For
   the reasons set forth below, we AFFIRM on all counts.
                                I.     Background
          Uretek is a Houston-based company that developed a patented
   process—the Uretek Process—for injecting expansive polyurethane foam
   into the ground. As Appellants explained, the goal of this process is to
   stabilize the ground against “gradual movements,” which may “go
   unnoticed until buildings and roads begin to crack, sink, and become
   unstable.” In 2003, Uretek entered into a Sublicense Agreement with
   UdeM, a Mexican corporation, whereby Uretek agreed that UdeM could
   “exclusively market the Uretek processes and products in Mexico.” UdeM
   sublicensed its exclusive rights to sell Uretek processes and products in
   Mexico to Urelift.
          In the years following the Sublicense Agreement, Urelift used the
   Uretek Process to help secure multiple projects in Mexico. In 2009, Mexico

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   City awarded Urelift the Sistema de Transporte Colectivo project (“STC”)
   on a sole-source basis at a price of MX$735.34 per kilogram of polymer. 1 At
   trial for the current litigation, Francisco Alvarez—a partner and investor in
   UdeM and Urelift—distinguished sole-source contracts from competitive
   bids and testified that the sole-source designation allowed Urelift to sell other
   jobs for the government “at that price.” Alvarez further testified that
   competitive bids forced Urelift to reduce its prices. However, Alvarez was
   neither tendered nor accepted as an expert witness. UdeM and Urelift
   tendered no expert on Mexican law to explain the implications of the sole-
   source designation.
           In 2010, the Barron family (whose trust owned Uretek) formed
   Structural Plastics, Inc. (“SPI”) to market Uretek production materials
   outside of the United States. SPI is owned by Mindy Barron Howard
   (daughter of Uretek CEO Brent Barron) and her husband, Galen Howard.
           That same year, Uretek released UdeM from its obligation “to
   purchase a minimum amount of products and services.” The parties also
   amended their original Sublicense Agreement. The original Sublicense
   Agreement contained a provision authorizing liquidated damages only to
   Uretek in case of breach by UdeM. The amendment authorized liquidated
   damages to either party in the event of breach by the other, adding the
   following:
           (4) b. Prohibited Sales of URETEK PROCESSES to
           Customers Inside the TERRITORY. In the event URETEK
           sells services utilizing URETEK PROCESSES to a customer

           1
             There are two STC projects relevant to this case—the 2009 sole-source contract
   awarded to Urelift and a 2016 competitive bid won by ALSO. The latter is “commonly
   referred to as ‘Metro Linea A.’” For ease of reference, only the 2009 sole-source STC
   project will be referred to as “STC.” The 2016 project will be referred to as “Metro Linea
   A.”

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          inside the TERRITORY, URETEK shall pay, and agrees to
          pay, SUBLICENSEE liquidated damages equal to fifty percent
          (50%) of the gross revenues collected from such customers no
          later than fifteen days from written notification by
          SUBLICENSEE of such demand therefor.
   In 2011, Uretek challenged the validity of the 2010 amendments to the
   Sublicense Agreement. The case went to a jury trial in April 2013, and the
   jury found in UdeM’s favor. Uretek appealed, and in 2014, a prior panel of
   this court affirmed the validity of the amended Sublicense Agreement, Uretek
   (USA), Inc. v. Ureteknologia de Mex. S.A. de C.V., 589 F. App’x 710, 713–15,
   716 (5th Cir. 2014) (per curiam).
          As the initial litigation proceeded, the factual predicate underlying the
   current litigation began to form. Despite its earlier sole-source designation,
   Urelift lowered prices on two projects in 2013—the Caminos y Puentes
   Federales de Ingresos y Servicios Conexos project (“CAPUFE”) and the
   first of two Secretaria de Infraestructura y Obra Publica’s projects (“SIOP
   #1”)—allegedly due to competition. It won both projects, but at a lower price
   than the MX$735.34/kg received when Urelift won STC on a sole-source
   basis some years earlier.        Specifically, CAPUFE was awarded at
   MX$223.55/kg and SIOP #1 at MX$612.37/kg.
          Though the record provides no exact date, at some point—late 2013
   at the earliest, late 2015 at the latest—Luis Sosa and Abel Guzman formed a
   soil-stabilization company called ALSO. ALSO purchased Uretek products
   from SPI. Sosa testified that the first purchase occurred in late 2015.
          Importantly, key individuals at Uretek and ALSO communicated via
   email throughout 2014. In a May 2014 email from Guzman to Sosa and
   Barron, Guzman recounted a meeting with project managers regarding the
   Metro Linea A project where he raised issues about Urelift and noted that
   Uretek planned to use the Uretek polymer with someone other than Urelift.

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             A few months after that email, Urelift again faced alleged competition,
   winning two contracts but, again, at different prices. Urelift’s winning streak
   ended in 2016 when it lost two projects to ALSO. First, in May 2016, ALSO
   obtained the Chapultepec project on a sole-source basis. Second, in July
   2016, three companies submitted competitive bids on the Metro Linea A
   project: ALSO, Comsa Emte S.A. de C.V. (“Comsa Emte”), and Urelift, but
   Comsa Emte and Urelift were then disqualified for various reasons.
   Accordingly, ALSO secured the Metro Linea A project.                Immediately
   preceding the bid, however, Barron sent a letter to the Metro Transportation
   Systems Project Manager, responding to “certain patent claims recently
   made by a representative of Urelift SA de CV.” The letter attached the
   European and U.S. patents and stated that no Mexican patent had been
   issued.
             UdeM and Urelift filed suit against Uretek in September 2016,
   alleging that Uretek breached the Sublicense Agreement by competing with
   UdeM and Urelift in Mexico. The case was tried by a jury in March 2019.
   The jury ruled against Uretek and awarded liquidated damages (as required
   by the Sublicense Agreement) and lost profits. Specifically, the jury awarded
   $1,460,000 in liquidated damages, an aggregated award of $6,110,000 on the
   four completed projects (because they were obtained at a price point lower
   than the STC price), $2,650,000 in lost profits for Chapultepec, and
   $4,310,000 in lost profits for Metro Linea A.
             Uretek challenged the jury awards, moving for judgment as a matter
   of law. The district court denied the motion with respect to liquidated
   damages and granted the motion with respect to lost profits.             Uretek
   subsequently filed a Rule 59(e) motion to alter or amend the judgment based
   on an intervening change in controlling law. The district court denied the
   Rule 59(e) motion on procedural grounds, holding that Uretek waived the
   argument that the liquidated-damages clause was unenforceable. UdeM then

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   filed a motion for attorneys’ fees, which the district court granted in part and
   denied in part, allowing UdeM to recover attorneys’ fees related to its
   liquidated-damages claim. UdeM and Urelift timely appealed, and Uretek
   timely cross-appealed.
                   II.      Jurisdiction & Standards of Review
          The district court had jurisdiction under 28 U.S.C. § 1332, and we
   have appellate jurisdiction under 28 U.S.C. § 1291. We review the grant or
   denial of judgment as a matter of law de novo. Hurst v. Lee Cnty., 764 F.3d
   480, 483 (5th Cir. 2014). We review issues of waiver and attorneys’ fees for
   abuse of discretion, see Six Dimensions, Inc. v. Perficient, Inc., 969 F.3d 219,
   225 (5th Cir. 2020) (waiver); ExxonMobil Corp. v. Elec. Reliability Servs., Inc.,
   868 F.3d 408, 421 (5th Cir. 2017) (attorneys’ fees); and we generally review a
   Rule 59(e) ruling for abuse of discretion, but “[t]o the extent that a ruling was
   a reconsideration of a question of law . . . the standard of review is de novo,”
   Ross v. Marshall, 426 F.3d 745, 763 (5th Cir. 2005) (quotation omitted).
                                 III.   Discussion
          On appeal, Uretek challenges the district court’s order awarding
   liquidated damages, Urelift challenges the district court’s order that it take
   nothing on its lost-profits claims, and all the parties have various challenges
   to the district court’s order regarding attorneys’ fees. We discuss each issue
   in turn below and affirm the judgment in full.
   A.     Liquidated Damages
          The district court correctly held that UdeM is entitled to liquidated
   damages. We begin with the waiver issue.
          On January 17, 2020, the district court denied Uretek’s Rule 50(b)
   motion with respect to liquidated damages.          The court held that the
   liquidated-damages provision of the amended Sublicence Agreement was not

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   an unenforceable penalty because—consistent with the factors discussed by
   the Texas Supreme Court in Phillips v. Phillips, 820 S.W.2d 785 (Tex.
   1991) 2—UdeM’s harm from Uretek’s breach was difficult to estimate and
   the provision offered a reasonable way to calculate damages.
           On February 7, 2020, the Texas Supreme Court decided Atrium
   Medical Center, LP v. Houston Red C LLC, 595 S.W.3d 188 (Tex. 2020), in
   which it held that the “party seeking liquidated damages bears the burden of
   showing that the provision, as drafted, accounts for” the Phillips factors. Id.
   at 192.     If the provision becomes an unenforceable penalty “due to
   unanticipated events,” id. at 192–93, then the breaching party is tasked with
   showing an “‘unbridgeable discrepancy’ between liquidated and actual
   damages,” id. at 198.
           On February 14, 2020, Uretek filed a Rule 59(e) motion to alter or
   amend the judgment on the grounds that Atrium constituted an “intervening
   change in controlling law.” The district court denied the motion. But on
   that motion, the district court did not reach the merits of the liquidated-
   damages issue, holding instead that Uretek had waived the issue by failing to
   raise it in the Joint Pretrial Order and its Rule 50(a) motion.
           While we disagree with this waiver conclusion, we may affirm based
   on any ground supported by the record, see Gulf Island, IV v. Blue Streak
   Marine, Inc., 940 F.2d 948, 952 (5th Cir. 1991), and the record here fully
   supports UdeM’s entitlement to liquidated damages.

           2
             “In order to enforce a liquidated damage clause, the court must find: (1) that the
   harm caused by the breach is incapable or difficult of estimation, and (2) that the amount
   of liquidated damages called for is a reasonable forecast of just compensation.” Phillips,
   820 S.W.2d at 788 (quotation omitted).

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           A liquidated-damages provision is enforceable under Texas law if, “at
   the time the parties’ agreement was made, (1) the harm that would result
   from a breach was difficult to estimate and (2) the liquidated damages
   provision reasonably forecast[s] just compensation.” Atrium, 595 S.W.3d at
   198. But because a facially enforceable liquidated-damages provision “can
   nevertheless operate” like a penalty when applied, Texas law “requires a
   third step: courts must examine whether, at the time of the breach, an
   ‘unbridgeable discrepancy’ exists between actual and liquidated damages.”
   Id. at 190.
          Turning to step one: at the time UdeM and Urelift entered into its
   agreement, damages were difficult to calculate; indeed, Urelift’s arguments
   about the damages support that conclusion. We have previously observed
   the inherent difficulty in calculating damages from a non-compete
   agreement, recognizing that “covenants not to compete often include a
   liquidated damages provision to avoid the difficulty of calculating damages.”
   Blase Indus. Corp. v. Anorad Corp., 442 F.3d 235, 238 (5th Cir. 2006); accord
   Int’l Marine, L.L.C. v. Delta Towing, L.L.C., 704 F.3d 350, 355 (5th Cir.
   2013). This case is no exception. UdeM paid a licensing fee—i.e., valuable
   consideration—for its exclusive right to the Uretek Process in Mexico. But,
   unlike Urelift, UdeM is not entitled to lost profits given that it is a holding
   company with no active operations.         Therefore, as the district court
   concluded, “[t]he diminishment of value caused by Uretek’s breach is
   difficult to ascertain because UdeM’s benefit is not direct.”
          On to step two: UdeM and Uretek’s agreement to pay 50% of gross
   revenues in liquidated damages was a reasonable estimate of just
   compensation. We begin by noting that the same exact liquidated-damages
   estimation that applies against Uretek (50% of gross revenues if Uretek
   breaches) also applies against UdeM (50% of gross revenues if UdeM
   breaches). This suggests that, at the time the provision was made, both

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   parties believed this method of calculating liquidated damages to be
   necessary and appropriate.         Moreover, the Texas Supreme Court
   emphasized in both Phillips and Atrium two circumstances in which a
   liquidated-damages estimation would be facially unreasonable: (1) if the
   estimation is a multiple of actual damages (e.g., ten times gross revenues); or
   (2) if the estimation treats dissimilar breaches similarly (e.g., subjecting the
   breaching party to a $10 million penalty, regardless of the amount of gross
   revenues gained or the extent of the breach). See Phillips, 820 S.W.2d at 789;
   Atrium, 595 S.W.3d at 196 (“The contract provision in this case neither
   multiplies actual damages nor penalizes dissimilar breaches with the same
   broad brush.”). Here, neither issue exists. The liquidated-damages estimate
   does not multiply gross revenues; it divides them. Nor does it treat dissimilar
   breaches similarly; the liquidated award is pegged to actual revenues. The
   estimation is, therefore, reasonable.
          Having satisfied steps one and two, the provision is facially valid. We
   now turn to the as-applied challenge in step three. Uretek failed to rebut the
   validity of the provision by “demonstrat[ing] an ‘unbridgeable discrepancy’
   between liquidated and actual damages.” See Atrium, 595 S.W.3d at 198. As
   the district court observed: “Uretek offers one sentence in argument that the
   harm to UdeM is not difficult to estimate. Uretek’s conclusory statement is
   not sufficient to overcome the contractual agreement and demonstrate the
   necessary “unbridgeable discrepancy.” Accordingly, we agree with the
   district court’s holding that UdeM is entitled to liquidated damages.
   B.     Lost Profits
          We clarify at the outset the core difference between liquidated
   damages and lost profits: liquidated damages may be awarded upon proof of
   breach if an enforceable liquidated-damages provision exists, but for lost
   profits, proof of breach alone is insufficient; the non-breaching party must

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   also prove a causal connection between the breach and the lost profits. See
   24 Williston on Contracts §§ 64:14, 65:33. This means that for
   Urelift to recover on the four completed projects, it must prove that, but-for
   Uretek’s breach, it would have received the STC price point on those
   projects. For Urelift to recover lost profits on Chapultepec and Metro Linea
   A, it must prove that it would have won the two projects absent Uretek’s
   interference. See Horizon Health Corp. v. Acadia Healthcare Co., Inc., 520
   S.W.3d 848, 861–62 (Tex. 2017) (holding the evidence was legally
   insufficient to support a lost-profits award where there was no evidence
   plaintiff’s bid would have won the contract).
          As a matter of law, Urelift cannot prevail because it failed to prove that
   but-for Uretek’s breach, it would have received more money for the four
   completed projects or won the Chapultepec or Metro Linea A projects.
   While there is some support for the jury finding of breach in part, evidence
   of breach alone cannot support a jury finding of causation for lost profits.

          i. Four Completed Projects

          Urelift argues that it “had to reduce its price for CAPUFE, SIOP #1,
   SIOP #2, and GFB projects because Uretek started competing with Urelift
   in the Mexican market” through ALSO in 2013. There are two issues, here.
   First, Urelift fails to prove that Uretek actually interfered with these projects.
   Second, even if Urelift could prove interference, Urelift fails to prove that
   but-for the interference, it would have secured STC pricing on these four
   projects.
          First, there is no evidence that Uretek actually interfered with these
   four projects. As the district court explained, the four projects were awarded
   in October 2013, December 2013, August 2014, and May 2015, but the record
   showed that ALSO had not actually bid on any project prior to September
   2015. Alvarez even “conceded that the competition on these four contracts

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   was ‘unknown,’ and that Urelift did not lose any bid because of that
   competition.”
          At oral argument, Appellants relied on the May 2014 email discussed
   above, which does not establish interference in the October 2013 and
   December 2013 projects. Moreover, because the email only references
   Metro Linea A, it does not show that ALSO interfered with the August 2014
   or May 2015 projects.
          Even assuming arguendo that the email can show interference with
   the four completed projects, to succeed on its lost-profits claims for those
   four projects, Urelift must reasonably show that the meeting discussed in the
   email had some impact on the conduct of the Mexican government. The
   record does not support such a finding. Prior to the meeting, Urelift won two
   of the disputed projects. After the meeting, Urelift won the other two
   disputed projects. So, the Mexican government acted in the same way before
   and after the meeting. Moreover, outside the two post-meeting projects that
   Urelift seeks lost profits on, Urelift won three additional projects and
   received more for those projects than the STC pricing. In fact, Urelift
   received the two highest-priced contracts it had ever received in December
   2015 and March 2016. Thus, the evidence is insufficient.
          In any event, the second issue Urelift faces is that even if it could show
   that Uretek interfered with the bidding on these four projects, there is no
   legally sufficient evidence demonstrating that Urelift lost any money. To
   calculate lost profits, Urelift’s expert subtracted the polymer price received
   on the four completed projects from the price received for STC in 2009,
   arguing that the sole-source designation made the STC price its “base”
   price. But Urelift did not present any legally sufficient evidence establishing
   that the “base” price accurately marked the floor price. In fact, on three other
   occasions after receiving sole-source designation, Urelift did not secure the

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   STC price, receiving lower prices for projects in 2010–2013. Moreover, as
   the district court pointed out, Urelift only presented testimony from Alvarez
   to support its argument that “obtaining a sole-source contract designation in
   2009 from one government agency” meant that “all other government
   agencies were required to award Urelift contracts through sole-source bids”
   at the STC price. Conversely, Sosa testified that no national price existed for
   polymers in Mexico. But neither Alvarez nor Sosa were tendered as experts
   on Mexican law, and no expert on Mexican law offered testimony regarding
   the pricing of polymers.
          Under Texas law, lost profits are recoverable as damages only if they
   can be proven “with reasonable certainty.” Tex. Instruments v. Teletron
   Energy Mgmt., 877 S.W.2d 276, 278–79 (Tex. 1994). Given the record,
   Urelift did not prove with reasonable certainty that Uretek interfered with
   the four completed projects or that it would have received STC pricing but-
   for Uretek’s interference. The district court, therefore, correctly held that
   there was not sufficient evidence to support the jury’s award of damages on
   the four completed projects.

         ii. Two Unrealized Projects

          Urelift also failed to prove with reasonable certainty that it would have
   won the Chapultepec or Metro Linea A projects had Uretek not interfered.
   The Texas Supreme Court’s decision in Formosa Plastics Corp. USA v.
   Presidio Engineers and Contractors, Inc., 960 S.W.2d 41 (Tex. 1998), is helpful
   here. In Formosa, a contractor brought suit to recover lost profits based on
   alleged fraud, breach of contract, and breaches of the duties of good faith and
   fair dealing. Id. at 43. The contractor then attempted to prove his claim for
   lost profits by using calculations based on hypothetical bids. Id. at 49–50.
   The Texas Supreme Court rejected this approach and held that the awarded
   damages for lost profits were “entirely speculative” because “there [wa]s no

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   evidence that [the party seeking damages] would have been awarded the
   project” had it made a bid. Id.
           As in Formosa, Urelift did not offer anything more than speculative
   evidence to show that it would have been awarded either Chapultepec or
   Metro Linea A. Starting with Chapultepec: Chapultepec was awarded to
   ALSO on a sole-source basis, meaning that Urelift and other companies could
   not submit bids for the project. In support of the argument that but-for
   Uretek’s interference, Urelift would have won Chapultepec, Urelift points
   to Alvarez’s testimony that Urelift would have bid on the project had it been
   given the opportunity to do so and that Uretek usurped that opportunity.
   Urelift, however, does not offer any evidence that the Chapultepec
   principals, absent any involvement from Uretek, would have awarded the
   project to Urelift, that they would have chosen Urelift over any other bidder,
   or that they exclusively wanted the Uretek Process. 3
           Urelift’s evidence with regards to Metro Linea A is just as speculative.
   The Metro Linea A project was awarded based on a bid process, and three
   companies entered bids: ALSO, Comsa Emte, and Urelift. But the Metro
   Linea A principals disqualified Urelift’s bid for several unrelated reasons:

           3
             Urelift insists that the district court faulted it for presenting only circumstantial
   rather than direct evidence, noting that “[a]ny ultimate fact may be proved by
   circumstantial evidence.” Russell v. Russell, 865 S.W.2d 929, 933 (Tex. 1993).
            Urelift misses the point, here: circumstantial evidence would, indeed, be helpful,
   but Urelift fails to present any circumstantial evidence regarding the conduct of
   Chapultepec on which a reasonable jury could rely. The only circumstantial evidence
   Urelift presented on the conduct of Chapultepec principals specifically is that the principals
   awarded the project to ALSO as a sole source. Alvarez (who, again, was neither tendered
   nor accepted as an expert on Mexican law) indicates only that “most of the time[]” Urelift
   was “awarded a contract as the sole source.” That does not mean that when a government
   agency awards a sole-source contract, it will continue to use that sole-source designation in
   every future project. In other words, the sole-source designation cannot on its own support
   a lost-profits award.

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   “(1) [the principles] lacked evidence that Urelift had adequate working
   capital; (2) [Urelift] failed to adequately document the monthly amounts of
   labor, machinery, service personnel, and materials to be expended;
   (3) [Urelift] failed to analyze the costs of the operation; and (4) [Urelift]
   lacked a detailed analysis of unit pricing.” Urelift’s bid price was also higher
   than Comsa Emte’s.
            Urelift asks us to ignore all the reasons it would not have been awarded
   Metro Linea A, basing its lost-profits claim on several inferences: that
   Mexico City wanted the Uretek Process, that Mexico City might have
   therefore overlooked the multitude of reasons it disqualified Urelift’s bid,
   that Mexico City cared about having the Uretek Process more than it cared
   about cost, and that Comsa Emte was not a serious competitor.
            Urelift asks us to make all these inferences in the absence of any
   evidence about or testimony from Mexico City officials. Instead, Urelift
   points us to the May 2014 Guzman email. Again, that email is not helpful,
   and Urelift’s other evidence does not prove causation either.
            We deeply respect and recognize the importance of jury decisions, but
   they still must be based upon evidence, not speculation. In order for Urelift
   to succeed, it needed to prove not only that the Mexican government wanted
   the Uretek Process, but also that it was solely motivated by its desire to use
   that process. To reach that conclusion, the jury was required to stack
   inference upon inference on nothing more than Urelift’s word. That is
   insufficient. See, e.g., Gutierrez v. Excel Corp., 106 F.3d 683, 689 (5th Cir.
   1997).
            To be clear, the jury could reasonably have made one assumption
   based on the May 2014 email: that the Mexican government preferred the
   Uretek Process.         But the other assumptions—that the Mexican
   government’s preference for the Uretek Process trumped all other

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   considerations (i.e., cost or all the other reasons it disqualified Urelift’s bid),
   and that the government’s indicated preference for the Uretek Process in
   2014 necessarily predicts their decision in 2016—could not reasonably be
   made. As such, Urelift could not reasonably prove its entitlement to lost
   profits.
   C.     Attorneys’ Fees
          Uretek argues that under the Texas Covenant Not to Compete Act,
   attorneys’ fees may not be awarded “on claims for breach of a covenant not
   to compete (except under circumstances not existing here).”           Neither the
   district court nor Appellants dispute the requirements of the Act. Rather,
   the district court held, and Appellants argue, that Uretek waived the issue.
          We have previously noted—specifically in the context of the Texas
   Covenants Not to Compete Act—that failure to “properly raise the issue
   before the district court” constitutes waiver. Olander v. Compass Bank, 363
   F.3d 560, 567 n.21 (5th Cir. 2004) (emphasis added). Here, Uretek did not
   raise this statutory bar in its answer, in the Joint Pretrial Order, or in any
   briefing prior to its reply to UdeM’s motion for attorneys’ fees. Moreover,
   in the Joint Pretrial Order, Uretek, UdeM, and Urelift “agree[d] that [the]
   dispute is governed by the substantive law of the State of Texas.” The parties
   then set out sixteen principles of Texas law that they agreed upon. Not once
   did they mention the Act. The parties also set out several principles of Texas
   law on which they disagreed. Again, they did not mention the Act.
          On appeal, Uretek notes that the Joint Pretrial Order binds the parties
   to Texas substantive law (which is true), and then argues that “substantive
   law” means “statutory as well as common law,” therefore binding all parties
   to the Act. We do not agree that the word “substantive” necessarily means
   “statutory” and specifically means the Texas Covenants Not to Compete
   Act. At the very least, the district court did not abuse its discretion in holding

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Case: 20-20073     Document: 00516151701           Page: 16    Date Filed: 01/03/2022

                                    No. 20-20073

   that the issue was not properly before it. See Six Dimensions, Inc., 969 F.3d at
   225. The issue is, therefore, waived.
          Given that we affirm the district court’s decisions on liquidated
   damages and lost profits, we also affirm the segregation of attorneys’ fees.
   See Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 313–14 (Tex. 2006).
          AFFIRMED.

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