T G Plastics Trading Co., Inc. v. Toray Plastics (America), Inc., 1st Cir. (2014)

7/26/2019 T G Plastics Trading Co., Inc. v. Toray Plastics (America), Inc., 1st Cir. (2014)

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United States Court of AppealsFor the First Circuit

No. 14- 1500

T G PLASTI CS TRADI NG CO. , I NC. ,d/ b/ a NATI ONAL PLASTI CS TRADI NG CO. ,

Pl ai nt i f f , Appel l ee,

v.

TORAY PLASTI CS ( AMERI CA) , I NC. ,

Def endant , Appel l ant .

APPEAL FROM THE UNI TED STATES DI STRI CT COURTFOR THE DI STRI CT OF RHODE I SLAND

[ Hon. J ohn J . McConnel l , J r . , U. S. Di st r i ct J udge]

Bef or e

Lynch, Chi ef J udge,Howar d, Ci r cui t J udge,

and Sayl or , * Di st r i ct J udge.

Sanf or d I . Wei sbur st , wi t h whomRyan S. Gol dst ei n, Dani elH. Br omber g, Qui nn Emanuel Ur quhar t & Sul l i van, LLP, J ef f r ey S.Br enner , and Ni xon Peabody LLP wer e on br i ef , f or appel l ant .

J ames Rat zel , wi t h whom Mi chael J . Dal y, Pi er ce At woodLLP, and Rat zel , Pyt l i k & Pezze, LLC wer e on br i ef , f or appel l ee.

December 22, 2014

*Of the District of Massachusetts, sitting by designation.


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LYNCH, Chief Judge. I n 2007, Tor ay Pl ast i cs ( Amer i ca) ,

I nc. ( "Tor ay") of Rhode I sl and, a manuf actur er of pl ast i c f i l m

pr oduct s, and T G Pl ast i cs Tr adi ng Co. , I nc. ( "Nat i onal Pl ast i cs") ,

a Col or ado- based br oker of pl ast i c f i l m pr oduct s, ent er ed i nt o a

Set t l ement Agr eement t o r esol ve a pendi ng l awsui t . As par t of t he

Set t l ement Agr eement , Tor ay agr eed to sel l cer t ai n mat er i al s

excl usi vel y t hr ough Nat i onal Pl ast i cs and t o pay Nat i onal Pl ast i cs

a twel ve per cent commi ssi on on al l sal es of t he mat er i al s t her eby

gener at ed. Nat i onal Pl ast i cs, bel i evi ng t hat Tor ay had not hel d up

i t s end of t he bar gai n, sued Tor ay f or br each of t he Set t l ement

Agr eement . A j ur y f ound Tor ay l i abl e and awar ded Nat i onal Pl ast i cs

over $2 mi l l i on i n damages. Tor ay appeal s, ar gui ng t hat Nat i onal

Pl ast i cs had wai ved i t s r i ght t o a j ur y t r i al by a bel at ed demand,

and t hat t he evi dence was i nsuf f i ci ent as a mat t er of l aw t o

suppor t t he j ur y' s f i ndi ng of l i abi l i t y or i t s cal cul at i on of

damages. We af f i r m, soundi ng a caut i onary note as t o del ayed

demands f or j ur y t r i al s.

I .

Toray i s a manuf act urer of pl ast i c f i l ms whi ch ar e used

i n var i ous f ood packagi ng and i ndust r i al appl i cat i ons. Tor ay' s

manuf act ur i ng pr ocesses pr oduce excess mat er i al s, such as scr ap

l ef t over af t er r ol l s of f i l m are cut t o a customer ' s

speci f i cat i ons, and f i l m t hat i s damaged or ot her wi se r ender ed

unusabl e dur i ng t he manuf act ur i ng pr ocess. Tor ay has hi st or i cal l y

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sol d t hi s mat er i al t o pl ast i cs br oker s. The br oker s t hen r esel l

t he mat er i al s, of t en t o busi nesses abr oad or t o cust omer s i n

"secondar y" or "commodi t i es" mar ket s, such as t he f l or al i ndust r y.

Nat i onal Pl ast i cs i s a pl ast i cs br oker t hat has pur chased

excess mat er i al s f r omTor ay si nce 1988. I n t he mi d- 2000s, Nat i onal

Pl ast i cs al l egedl y f el l behi nd on payment s owed t o Tor ay, and i n

May 2006, Tor ay f i l ed a l awsui t t o r ecover appr oxi mat el y $1. 5

mi l l i on i n out st andi ng payment s ( " t he Fi r st Lawsui t " ) . Nat i onal

Pl ast i cs count er cl ai med, al l egi ng, among ot her t hi ngs, t hat Tor ay

had commi t t ed br each of cont r act and t or t i ous i nt er f er ence wi t h a

busi ness r el at i onshi p.

Af t er conduct i ng "mont hs of di scover y, " t he par t i es

event ual l y set t l ed t he Fi r st Lawsui t . The t er ms of t he set t l ement

were memor i al i zed i n a "Set t l ement Agr eement and Rel ease, " si gned

on Oct ober 15- 16, 2007, whi ch pr ovi ded t hat , " [ i ] n f ul l and f i nal

set t l ement of t he [ Fi r st Lawsui t ] . . . Tor ay and Nat i onal Pl ast i cs

wi l l ent er i nt o a l ong t er m busi ness r el at i onshi p . . . and

Nat i onal Pl ast i cs wi l l pay Tor ay $1. 5 mi l l i on. " As par t of t hat

"l ong t er mbusi ness r el at i onshi p, " Tor ay agr eed t hat , f or a per i od

of sevent een years begi nni ng on Oct ober 22, 2007, i t woul d

excl usi vel y sel l t o Nat i onal Pl ast i cs one

hundr ed per cent ( 100%) of al l scr ap pl ast i c,ot her scr ap, second qual i t y mat er i al s,downgr aded mat er i al s, r ecycl abl e mat er i al s notr eused i nt er nal l y and aged f i l m. BecauseToray does not have di r ect cont r ol over t heend use or appl i cat i ons of t hese i t ems . . . ,Toray cannot guar ant ee per f or mance of t hi s

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f i l m i n any appl i cat i on. Dur i ng t he Ter m,Toray wi l l al so r egul ar l y share al li nf or mat i on wi t h Nat i onal Pl ast i cs on al lper sons or ent i t i es appr oachi ng Tor ay f orpur chase of Tor ay' s scr ap pl ast i c, ot herscr ap, second qual i t y mat er i al s, downgr aded

mat er i al s, r ecycl abl e mat er i al s and aged f i l m.Nat i onal Pl ast i cs wi l l be r esponsi bl e f orcont act i ng al l of t hese possi bl e l eads andf ol l owi ng up wi t h Toray on t he out come.

The Set t l ement Agreement f ur t her provi ded t hat , " [ i ] n or der t o

i nsur e t hat Tor ay i s r ecei vi ng compet i t i ve mar ket pr i ci ng, Nat i onal

Pl ast i cs wi l l wor k on a st r ai ght t wel ve per cent ( 12%) of al l sal es

gener at ed by Nat i onal Pl ast i cs. " I t al so cont ai ned a pr ovi si on

gi vi ng each par t y t he r i ght t o audi t t he ot her on an annual basi s

i n or der t o ensure compl i ance.

The par t i es r ef er t o t he l i st of i t ems Toray agr eed t o

sel l excl usi vel y t o Nat i onal Pl ast i cs - - "scrap pl ast i c, ot her

scr ap, second qual i t y mat er i al s, downgr aded mat er i al s, r ecycl abl e

mat er i al s not r eused i nt er nal l y and aged f i l m" - - as t he "agr eed

mat er i al s. " The pr i nci pal s who negot i at ed t he Set t l ement

Agr eement , Tor ay Chi ef Fi nanci al Of f i cer Davi d J ose and Nat i onal

Pl ast i cs owner Tor ge Goder st ad, di d not di scuss t he pr eci se meani ng

of t he wor ds descr i bi ng t he agr eed mat er i al s. I n par t i cul ar , t he

t erm"aged f i l m" was added t o t he Set t l ement Agr eement near t he end

of set t l ement negot i at i ons and i s not def i ned el sewher e i n t he

agr eement .

Soon af t er execut i ng t he Set t l ement Agr eement , t he

par t i es began t o di sput e sever al aspect s of i t s appl i cat i on,

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i ncl udi ng, as r el evant her e, Tor ay' s dut y t o sel l aged f i l m

excl usi vel y t o Nat i onal Pl ast i cs. I n J ul y 2009, Nat i onal Pl ast i cs

sued Tor ay i n f eder al cour t i n Rhode I sl and, cl ai mi ng damages

st emmi ng f r om Tor ay' s al l eged f ai l ur e t o sel l 100 per cent of t he

agr eed mat er i al s t o Nat i onal Pl ast i cs and r equest i ng speci f i c

per f or mance of t he Set t l ement Agr eement ' s audi t i ng pr ovi si ons. The

or i gi nal compl ai nt di d not cont ai n a j ur y demand.

Af t er t wo year s of set t l ement negot i at i ons, whi ch

ul t i mat el y pr oved f r ui t l ess, Nat i onal Pl ast i cs moved t o amend i t s

compl ai nt i n J une 2011 t o add t hr ee addi t i onal cl ai ms and a request

f or a j ur y t r i al . The di st r i ct cour t gr ant ed t he mot i on f or l eave

t o amend over Tor ay' s obj ect i on. Tor ay count er cl ai med, al l egi ng

br each of t he Set t l ement Agr eement . However , by t he t i me t he case

was submi t t ed t o t he j ur y i n J anuar y 2014 - - r oughl y thi r t y mont hs

af t er Nat i onal Pl ast i cs f i l ed i t s amended compl ai nt - - t he di sput e

had, f or al l pr act i cal pur poses, been nar r owed t o a si ngl e i ssue:

whet her Toray had breached i t s dut y under t he Set t l ement Agreement

t o sel l aged f i l m excl usi vel y t o Nat i onal Pl ast i cs. 1 Nat i onal

Pl ast i cs' cl ai m of damages was based sol el y on t hi s al l eged "aged

f i l m" br each; i t di d not r equest damages based on Tor ay' s sal es of

any of t he ot her "agr eed mat er i al s. "

1The parties' other claims had either been withdrawn or

dismissed.

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At t r i al , a pr i mar y i ssue i n cont ent i on was whet her t her e

had been any meet i ng of t he mi nds as t o t he meani ng of t he t erm

"aged f i l m. " Ther e was conf l i ct i ng evi dence pr esent ed r egar di ng

t hat i ssue. Tor ay CEO Ri char d Schl oesser and CFO J ose t est i f i ed

t hat , "[ f ] r om an account i ng st andpoi nt , " mat er i al i s consi der ed

"aged" one year af t er i t s manuf act ur e, at whi ch poi nt Tor ay t akes

a r eser ve agai nst t he mat er i al f or f i nanci al account i ng pur poses.

Schl oesser admi t t ed t hat , i n a deposi t i on i n t he Fi r st Lawsui t ( i n

whi ch t he meani ng of t he t erm "aged mater i al " was at i ssue) he had

def i ned "aged mat er i al " as " f i l m gener al l y that r eaches one year "

and i s "wr i t t en down by t he Fi nance Depar t ment . " Thi s descr i pt i on

i s al so consi st ent wi t h e- mai l s Schl oesser sent t o Goder st ad af t er

execut i on of t he Set t l ement Agr eement , i n whi ch Schl oesser wr ot e

t hat "each mont h a r epor t i s gener at ed t hat t ar get s f i l mt hat i s 11

mont hs ol d and wi l l go aged i n t he next mont h. " Tor ay' s pol i cy i s

i n accor dance wi t h General l y Accept ed Account i ng Pr i nci pl es, under

whi ch compani es ar e requi r ed t o val ue thei r asset s i n a manner

"gr ounded i n r eal i t y" i n or der t o pr epar e accur at e f i nanci al

st at ement s. Accor di ng t o Nat i onal Pl ast i cs' exper t account ant ,

Cat her i ne Par ent e, Tor ay' s i nvent or y r eser ve pol i cy

"i ndi cat [ ed] . . . t hat t he age of t he i nvent or y si gni f i cant l y

af f ects t he val ue of t hat i nvent or y . . . . [ b] y r educi ng i t . "

Schl oesser al so t est i f i ed, however , t hat "f r oman oper at i onal st and

poi nt , [ pl ast i c f i l m] does not age; i t ' s i nert . . . . [ Toray]

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coul d sel l t hat f i l m t hat we pr oduced t oday t hr ee year s f r omt oday

and i t woul d wor k per f ect l y. "

Mat t hew Br own, a Gener al Manager at Tor ay, t est i f i ed i n

hi s deposi t i on t hat , i n hi s vi ew, aged f i l mwas a "gener al i zat i on"

t hat "speci f i e[ d] f i l mt hat [ he] want [ ed] t he sal es f ol ks t o f ocus

on because i t ' s been ar ound f or a whi l e. " Li ke Schl oesser , he al so

st at ed at t r i al t hat "f r om a sal es and oper at i ons poi nt of

vi ew . . . t her e i s no aged f i l m. " Nat i onal Pl ast i cs' Goder st ad

t est i f i ed t hat he under st ood "aged f i l m" t o mean gener al l y

"mat er i al t hat t hey made and di dn' t go out r i ght away, so t hey put

i t i n i nvent or y, t hey hel d i t f or one r eason or anot her . " He sai d

he wasn' t "sure" about t he physi cal age of "aged f i l m, " but t hought

i t coul d be anywhere between t hr ee and ei ght een mont hs ol d.

The par t i es st i pul at ed t hat bet ween November 1, 2007, and

August 31, 2012, Tor ay sol d appr oxi mat el y 9. 2 mi l l i on pounds of

f i l m ol der t han t wel ve mont hs t o ent i t i es ot her t han Nat i onal

Pl ast i cs and had ear ned revenue on those sal es t ot al i ng

$16, 836, 907. 91. I n hi s cl osi ng ar gument , counsel f or Nat i onal

Pl ast i cs ar gued t o t he j ur y t hat , i f t he j ur y f ound t hat Tor ay had

br eached t he Set t l ement Agr eement by sel l i ng aged f i l mt o ent i t i es

ot her t han Nat i onal Pl ast i cs, t he j ur y shoul d cal cul at e damages by

mul t i pl yi ng Tor ay' s r evenue by Nat i onal Pl ast i cs' t wel ve per cent

commi ss i on under t he Set t l ement Agr eement , f or a total of

$2, 020, 428. 70. Counsel f or Tor ay cont ended i n hi s cl osi ng t hat

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t hi s damages f i gur e was "pur e specul at i on" because Nat i onal

Pl ast i cs had f ai l ed t o show t hat i t "coul d have sol d [ t he aged

f i l m] at t he same pr i ces i n t he same mar ket pl ace [ as Tor ay] . "

The j ury f ound Toray l i abl e f or breach of t he Set t l ement

Agr eement and awarded Nat i onal Pl ast i cs $2, 020, 428. 95 i n damages.

Since that figure is equal to twelve percent of $16, 836, 907. 91, it

is appar ent t hat t he j ur y adopt ed Nat i onal Pl ast i cs' pr oposed

met hod of cal cul at i ng damages. Af t er t he ver di ct , Tor ay r enewed

i t s ear l i er mot i on f or j udgment as a mat t er of l aw. The mot i on

r est ed on t wo gr ounds: ( 1) Nat i onal Pl ast i cs f ai l ed t o pr esent

suf f i ci ent evi dence t hat t he par t i es i nt ended t he t er m"aged f i l m"

t o mean al l f i l m t hi r t een or mor e mont hs ol d, and ( 2) t he j ur y' s

damages award was i mpermi ss i bl y specul at i ve because Nat i onal

Pl ast i cs f ai l ed t o pr esent evi dence t hat i t woul d have gener at ed

t he same r evenue f r omsel l i ng aged f i l mas Tor ay di d. The di st r i ct

cour t summar i l y deni ed t he mot i on, f i ndi ng t hat t he j ur y' s ver di ct

was "a r at i onal det er mi nat i on of t he credi bi l i t y of t he wi t nesses

and t he f act s as der i ved f r om t he evi dence" and "a r easonabl e

appl i cat i on of t he f act s t o t he l aw. " The cour t ent er ed f i nal

j udgment i n f avor of Nat i onal Pl ast i cs . Thi s appeal f ol l owed.

I I .

We f i r st addr ess Tor ay' s cl ai m t hat t he di st r i ct cour t

er r ed i n al l owi ng Nat i onal Pl ast i cs t o amend i t s compl ai nt t o add

a j ury demand.

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Under Feder al Rul e of Ci vi l Pr ocedur e 38( b) , "a par t y may

demand a j ur y t r i al by . . . ser vi ng t he ot her par t i es wi t h a

wr i t t en demand . . . no l at er t han 14 days af t er t he l ast pl eadi ng

di r ect ed t o t he i ssue i s ser ved. " "A par t y wai ves a j ur y t r i al

unl ess i t s demand i s pr oper l y ser ved and f i l ed. " Fed. R. Ci v. P.

38( d) . However , t he di st r i ct cour t may, i n i t s di scret i on, excuse

a par t y' s wai ver of a j ur y t r i al . See Fed. R. Ci v. P. 39( b) ;

Rowl et t v. Anheuser- Busch, I nc. , 832 F. 2d 194, 199- 200 ( 1st Ci r .

1987) , abr ogat ed on ot her gr ounds by I acobucci v. Boul t er , 193 F. 3d

14 ( 1st Ci r . 1999) . "[ T] he di scret i on under Rul e 39( b) i s ver y

br oad and . . . t he case woul d be ver y rar e i ndeed wher e a di st r i ct

cour t abused i t s di scr et i on i n denyi ng or gr ant i ng a Rul e 39( b)

mot i on. " Rowl et t , 832 F. 2d at 200; see al so Moor es v. Gr eenberg,

834 F. 2d 1105, 1109 ( 1st Ci r . 1987) ; 9 Wr i ght & Mi l l er , Feder al

Pr act i ce and Pr ocedur e 2334 ( 3d ed. ) ( expl ai ni ng t hat " t he

appel l at e cour t s or di nar i l y wi l l not i nt er vene or over t ur n t he

act i on t aken by t he t r i al j udge" on a Rul e 39( b) mot i on) . I ndeed,

Toray admi t s i n i t s r epl y br i ef t hat i t can ci t e t o no case i n

whi ch a di st r i ct cour t ' s al l owance of a Rul e 39( b) mot i on "was

gr ounds f or r ever sal of a j ur y ver di ct on appeal . "

I n deci di ng Rul e 39( b) mot i ons, cour t s have consi der ed

var i ous f act or s, such as

( 1) whet her t he case i nvol ves i ssues whi ch ar ebest t r i ed t o a j ur y; ( 2) whet her gr ant i ng t hemot i on woul d r esul t i n a di sr upt i on of t hecour t ' s schedul e or t hat of t he adver se par t y;

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( 3) t he degr ee of pr ej udi ce t o t he adver separ t y; ( 4) t he l engt h of t he del ay i n havi ngr equest ed a j ur y t r i al ; and ( 5) t he r eason f ort he movant ' s t ar di ness i n r equest i ng a j ur yt r i al .

Par r ot t v. Wi l son, 707 F. 2d 1262, 1267 ( 11t h Ci r . 1983) ; accor d

Dani el I nt ' l Cor p. v. Fi schbach & Moor e, I nc. , 916 F. 2d 1061, 1064

( 5t h Ci r . 1990) . Any i nqui r y i nt o t he pr opr i et y of a Rul e 39( b)

mot i on i s t hus a hi ghl y f act - speci f i c endeavor . See 9 Wr i ght &

Mi l l er , supr a, 2334 ( "The t r i al cour t ought t o appr oach each

appl i cat i on under Rul e 39( b) wi t h an open mi nd and an eye to t he

f act ual s i t uat i on i n t hat par t i cul ar case . . . . " ) .

On t hese f act s, i t was not an abuse of di scr et i on f or t he

di st r i ct cour t t o al l ow Nat i onal Pl ast i cs t o amend i t s compl ai nt t o

add a j ur y demand. The di st r i ct cour t f ound, and Tor ay does not

cont est , t hat t he i ssues i n t hi s case wer e sui t ed t o j ur y

determi nat i on. The al l owance of t he mot i on t o amend di d not

di sr upt t he schedul e of t he l i t i gat i on; at t he t i me of t he

amendment , di scover y was st i l l i n i t s ear l y st ages due t o t he

par t i es' ear l i er ef f or t s " t o r esol v[ e] t he mat t er as opposed t o

l i t i gat [ e] i t . " Mor eover , Tor ay has conceded t hat i t suf f er ed no

pr ej udi ce as a resul t of t he amendment i n t er ms of i t s abi l i t y to

pr epar e f or t r i al , si nce i t had t wo and a hal f year s af t er t he

amended compl ai nt was f i l ed t o r eady i t s case. 2 Cf . Rowl et t , 832

2This case is a far cry from Ypsilanti Community Utilities

Authority v. Meadwestvaco Air Systems, LLC, No. 07-CV-15280, 2010WL 1644058 (E.D. Mich. Apr. 22, 2010), which Toray cites in its

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F. 2d at 200 ( af f i r mi ng di st r i ct cour t ' s gr ant of a Rul e 39( b)

mot i on af t er f i ndi ng t hat def endant "was not pr ej udi ced" because

"t he t r i al was not del ayed or ext ended, nor was t her e any unf ai r

sur pr i se") .

The t i me per i od t hat el apsed bet ween Nat i onal Pl ast i cs '

f i l i ng of t he i ni t i al compl ai nt and i t s demand f or a j ur y t r i al was

si gni f i cant , t o be sur e, and such a l ong del ay woul d or di nar i l y

counsel agai nst excusi ng a j ur y wai ver . But we agr ee wi t h t he

di st r i ct cour t t hat t he r eason of f er ed f or t he del ay - - emphasi s on

set t l ement negot i at i ons - - was val i d i n t he cont ext of t hi s case.

I n J une 2010, t he Magi st r at e J udge, sensi ng t hat t he par t i es wer e

pr ogr essi ng t oward set t l ement , had i mposed a "morator i um" on

di scover y wi t h t he goal of f ur t her f aci l i t at i ng negot i at i ons, and

t he j udge l i f t ed t he di scover y st ay i n J ul y 2010 on t he

brief. There, the district court denied a Rule 39(b) motion thatdefendants filed "just two days before the final pre-trialconference," after the court had denied defendants' motion forsummary judgment, and after the plaintiffs had "made severalstrategic decisions in the course of preparing th[e] case for trialbased upon the belief that th[e] case would be tried to the bench."Id. at *2-3. Here, the Rule 39(b) motion was filed two and a halfyears before trial, long before any major strategic decisions hadbeen made.

This case is likewise distinguishable from Olympia Express,Inc. v. Linee Aeree Italiane, S.P.A., 509 F.3d 347 (7th Cir. 2007),also relied on by Toray. In Olympia Express, the Seventh Circuit

held that it would not excuse plaintiffs' four-year delay inrequesting a jury trial in a suit brought under the ForeignSovereign Immunities Act, in view of the "practical concerns ofpreparation and predictability" and "[t]he purpose of foreignsovereign immunity." Id. at 352. The doctrine of foreignsovereign immunity is not implicated in this case, nor is there anysuggestion that the amendment disrupted Toray's preparation fortrial.

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under st andi ng t hat t he par t i es woul d not t ake any st eps t o

"i nt er f er e wi t h set t l ement negot i at i ons. " I t was t hus reasonabl e

f or Nat i onal Pl ast i cs t o del ay i t s request f or a j ur y t r i al unt i l

i t became cl ear t hat set t l ement woul d not be f or t hcomi ng. Thi s was

not , as Tor ay woul d have i t , si mpl y a case of an unexpl ai ned l ast -

mi nut e change i n t act i cs.

I n vi ew of t hese consi der at i ons, t hi s i s not one of t he

"ver y r ar e" cases i n whi ch a di st r i ct cour t abused i t s di scret i on

by gr ant i ng a Rul e 39( b) mot i on. See Rowl et t , 832 F. 2d at 200. We

st r ess, t hough, t hat a par t y t akes a consi der abl e r i sk i n del ayi ng

t he maki ng of a j ury demand.

I I I .

I n i t s second cl ai mof er r or , Tor ay ar gues t hat Nat i onal

Pl ast i cs' cl ai m f or br each of t he Set t l ement Agr eement shoul d not

have gone t o t he j ur y because Nat i onal Pl ast i cs f ai l ed t o pr esent

suf f i ci ent evi dence t o est abl i sh t hat t he par t i es had a mut ual

under st andi ng of t he t er m "aged f i l m" as al l f i l m ol der t han one

year . We are not persuaded.

Under Feder al Rul e of Ci vi l Procedur e 50, t he cour t may

gr ant j udgment as a mat t er of l aw t o a part y on an i ssue i f " t he

cour t f i nds t hat a r easonabl e j ur y woul d not have a l egal l y

suf f i ci ent evi dent i ar y basi s t o f i nd f or t he [ nonmovi ng] par t y on

t hat i ssue. " We r evi ew a di st r i ct cour t ' s deni al of a Rul e 50

mot i on de novo, "vi ewi ng t he evi dence i n t he l i ght most f avor abl e

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t o the nonmovi ng par t y. " Mont eagudo v. Asoci aci n de Empl eados del

Est ado Li br e Asoci ado de P. R. , 554 F. 3d 164, 170 ( 1st Ci r . 2009)

( quot i ng Mar cano Ri ver a v. Tur abo Med. Ct r . P' shi p, 415 F. 3d 162,

167 ( 1st Ci r . 2005) ) ( i nt er nal quot at i on mar ks omi t t ed) . " [ A]

par t y seeki ng t o over t ur n a j ur y ver di ct f aces an uphi l l bat t l e, "

si nce " [ c] our t s may onl y gr ant a j udgment cont r aveni ng a j ur y' s

determi nat i on when t he evi dence poi nt s so st r ongl y and

over whel mi ngl y i n f avor of t he movi ng par t y that no r easonabl e j ur y

coul d have r et ur ned a ver di ct adver se t o t hat par t y. " I d.

( quot i ng Mar cano Ri ver a, 415 F. 3d at 167) ( i nt er nal quot at i on mar ks

omi t t ed) .

Toray cannot meet t hat st r i ngent st andar d her e. As t he

j ury was cor r ect l y i nst r uct ed, i t s obj ect i ve i n const r ui ng t he

t er ms of t he Set t l ement Agr eement was " t o ascer t ai n the i nt ent of

t he par t i es. " Haf f enr ef f er v. Haf f enr ef f er , 994 A. 2d 1226, 1233

( R. I . 2010) ( ci t i ng The El ena Car ci er i Tr ust - 1988 v. Ent er .

Rent - A- Car Co. of R. I . , 871 A. 2d 944, 947 ( R. I . 2005) ) . Ther e i s

suf f i ci ent evi dence i n t he t r i al r ecor d upon whi ch a r easonabl e

j ury coul d have concl uded t hat t he par t i es i ntended t he t er m"aged

f i l m" t o mean al l f i l m t hi r t een or mor e mont hs ol d.

Fi r st , t here was evi dence t hat Tor ay document s and

t est i mony f r omt he Fi r st Lawsui t had def i ned "aged f i l m" i n such a

manner . For exampl e, Tor ay' s Answer t o Nat i onal Pl ast i cs'

count er cl ai m i n t hat sui t st at ed t hat "Excess Mat er i al means

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mat er i al t hat does not meet speci f i cat i on and i ncl udes mat er i al

t hat i s aged ( over 12 mont hs) or obsol et e, " and Schl oesser

t est i f i ed t hat "aged mat er i al " i s "f i l mgener al l y t hat r eaches one

year . " These document s and t est i mony were avai l abl e t o Nat i onal

Pl ast i cs pr i or t o t he execut i on of t he Set t l ement Agr eement . Thus,

cont r ar y t o Tor ay' s ar gument , Tor ay' s i nt er nal def i ni t i on of t he

t er m "aged, " i nsof ar as i t became publ i c recor d dur i ng t he Fi r st

Lawsui t , coul d have i nf l uenced Nat i onal Pl ast i cs' under st andi ng of

t he t er m "aged f i l m" as i t i s used i n t he Set t l ement Agr eement .

Second, Tor ay CEO Schl oesser equated t he t erm" aged" wi t h

"13 mont hs [ol d] " i n hi s t r i al t est i mony. And f i nal l y, Tor ay CFO

J ose t est i f i ed t hat Toray t ook a f i nanci al r eser ve agai nst f i l m

ol der t han one year , and Toray Demand Manager J ohn Angel i na st at ed

t hat "aged f i l m" was " f i l m t hat a f i nanci al r eser ve has been t aken

agai nst . " Taken t oget her , t hi s evi dence suggest s t hat , at t he t i me

Toray and Nat i onal Pl ast i cs wer e negot i at i ng t he Set t l ement

Agr eement , bot h par t i es under st ood t he t er m t o mean f i l m t hi r t een

mont hs ol d or ol der - - or at l east a r easonabl e j ur y coul d so

concl ude.

I V.

Fi nal l y, Tor ay cont ends t hat Nat i onal Pl ast i cs f ai l ed t o

pr esent suf f i ci ent evi dence t o al l ow a j ur y t o concl ude wi t h

r easonabl e cer t ai nt y t hat Nat i onal Pl ast i cs suf f er ed $2, 020, 428. 95

i n damages as a r esul t of Tor ay' s breach of t he Set t l ement

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Agr eement . Tor ay makes t wo argument s i n suppor t of t hi s

cont ent i on: f i r st , t hat Nat i onal Pl ast i cs of f er ed no evi dence

t endi ng t o show t hat i t woul d have been abl e t o sel l aged f i l m f or

t he same pr i ce and to t he same cust omers as Tor ay sol d i t ; and

second, t hat Nat i onal Pl ast i cs f ai l ed t o pr esent any evi dence as t o

t he cost s i t woul d have i ncur r ed i n sel l i ng aged f i l m.

We do not consi der Tor ay' s ar gument r egardi ng Nat i onal

Pl ast i cs' cost s because i t was not pr eser ved. At no poi nt i n t he

t r i al di d Tor ay ar gue t hat t he pr oper measure of damages i nvol ved

deduct i ng Nat i onal Pl ast i cs' oper at i ng cost s f r om i t s ant i ci pat ed

r evenues, nor di d Tor ay ask f or such an i nst r uct i on t o be gi ven t o

t he j ur y. The i ssue had not been r ai sed at al l , even i n Tor ay' s

mot i on f or j udgment as a mat t er of l aw under Rul e 50. 3 As Tor ay

admi t s, i t made t wo, and onl y two, ar gument s i n suppor t of i t s Rul e

50 mot i on: ( 1) Nat i onal Pl ast i cs f ai l ed t o pr esent suf f i ci ent

evi dence t o show a mut ual underst andi ng of t he meani ng of t he t erm

"aged f i l m" and ( 2) Nat i onal Pl ast i cs f ai l ed t o pr esent evi dence

t hat woul d al l ow a r easonabl e j ur y t o concl ude t hat i t woul d have

gener at ed t he same r evenues f r omsel l i ng "aged f i l m" as Tor ay di d. 4

3 I ndeed, t he par t i es di d not even conduct di scover y oncosts.

4Toray's full argument in support of its motion for

judgment as a matter of law with respect to the damages issue, madeat the close of National Plastics' case, was as follows:

There is no evidence whatsoever as to what Mr.Goderstad would have sold those products at,at what pricing and to whom. He simply

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Those cont ent i ons wer e not suf f i ci ent t o preser ve t he

cost s ar gument . A Rul e 50 mot i on "must be suf f i ci ent l y speci f i c so

as t o appr i se t he di st r i ct cour t of t he gr ounds r el i ed on i n

support of t he mot i on. " Mont eagudo, 554 F. 3d at 170 ( quot i ng

Par ker v. Ger r i sh, 547 F. 3d 1, 12 ( 1st Ci r . 2008) ) ( i nt er nal

quot at i on mar ks omi t t ed) . Ar gument s not " spel l [ ed] out . . .

squar el y and di st i nct l y" i n t he di st r i ct cour t ar e wai ved. Uni t ed

St at es v. Samboy, 433 F. 3d 154, 161 ( 1st Ci r . 2005) ( quot i ng

Ri ver aGomez v. de Cast r o, 843 F. 2d 631, 635 (1st Ci r . 1988) )

( i nt er nal quot at i on mar ks omi t t ed) ; see al so Mont eagudo, 554 F. 3d

at 170- 71; Par ker , 547 F. 3d at 12 ( not i ng t hat a Rul e 50 mot i on

"pr eserves f or r evi ew onl y those gr ounds speci f i ed at t he t i me, and

no ot her s" ( quot i ng Zachar v. Lee, 363 F. 3d 70, 73 ( 1st Ci r . 2004) )

( i nt er nal quot at i on mar ks omi t t ed) ) . Tor ay' s ar gument t hat t he

evi dence di d not show t hat Nat i onal Pl ast i cs woul d have gener at ed

t he same r evenues f r om sel l i ng "aged f i l m" as Tor ay di d was not

suf f i ci ent t o put t he di st r i ct cour t on not i ce of i t s cost s

engaged in the pure speculation that he isentitled to 12 percent of what Toray soldthose products to [sic] and its pricing to itscustomers and its marketplaces. There's noconnection here with any evidence as to whatMr. Goderstad's company actually could have

sold the products for, to whom, when and inwhat amounts. His 12 percent is based on hisfigures under the contract, not ours.

This was not enough to make clear to the trial judge the theorythat Toray now advances about deduction of operating costs.Toray's renewed motion for judgment as a matter of law simplyreiterated this argument.

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argument . Nor was Tor ay' s general argument t hat t he r equest ed

damages awar d was specul at i ve suf f i ci ent ; t hat cont ent i on was t oo

vague t o encompass t he cost s ar gument , especi al l y si nce t he i ssue

had not been r ai sed t o t he cour t or t o t he j ur y at any ear l i er

poi nt . Tor ay si mpl y di d not "spel l out i t s [ cost s] ar gument [ ]

squar el y and di st i nct l y" as i s requi r ed t o r ai se i t on appeal . See

Samboy, 433 F. 3d at 161 ( i nt ernal quotat i on marks omi t t ed) . 5

We addr essed Tor ay' s f i r st pr eserved argument above; we

now t ur n t o t he second.

As t he di st r i ct cour t cor r ectl y i nst r ucted t he j ur y,

under Rhode I sl and l aw, " ' [ t ] he amount of damages sust ai ned f r oma

br each of cont r act must be pr oven wi t h a r easonabl e degr ee of

cer t ai nt y, and t he pl ai nt i f f must est abl i sh r easonabl y pr eci se

f i gur es and cannot r el y upon specul at i on. ' " Guzman v. J an- Pr o

Cl eani ng Sys. , I nc. , 839 A. 2d 504, 508 ( R. I . 2003) ( al t er at i on i n

or i gi nal ) ( quot i ng Mktg. Desi gn Sour ce, I nc. v. Pr anda N. Am. ,

I nc. , 799 A. 2d 267, 273 ( R. I . 2002) ) ( i nt er nal quot at i on mar ks

omi t t ed) . "However , [ p] l ai nt i f f s wi l l not be deni ed r ecover y

mer el y because t he damages . . . ar e di f f i cul t t o ascer t ai n, as

l ong as t hey pr ove damages wi t h r easonabl e cer t ai nt y. " Sophi e F.

Br onowi ski Mul l i gan I r r evocabl e Tr ust v. Br i dges, 44 A. 3d 116, 120

5Ordinarily, to be clear, a plaintiff seeking damages for

breach of contract is required to show evidence of lost profits, asopposed to lost revenues. See, e.g., Troutbrook Farm, Inc. v.DeWitt, 611 A.2d 820, 824 (R.I. 1992).

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( R. I . 2012) ( al t er at i ons i n or i gi nal ) ( ci t at i ons omi t t ed) ( i nt er nal

quot at i on mar ks omi t t ed) ; see al so Smi t h Dev. Cor p. v. Bi l ow

Ent er s. , I nc. , 308 A. 2d 477, 483 ( R. I . 1973) ( not i ng t hat

"' absol ut e cer t ai nt y i n pr ovi ng . . . quant um [ of damages] i s not

r equi r ed' " and t hat t he j ur y need onl y "be gui ded by some rat i onal

st andar d" ( ci t at i ons omi t t ed) ) .

Ther e was evi dence i n t he r ecor d upon whi ch a r easonabl e

j ury coul d concl ude t hat Nat i onal Pl ast i cs est abl i shed t he damages

f r om Tor ay' s br each wi t h r easonabl e cer t ai nt y. I n an e- mai l t hat

Toray CFO J ose sent t o Goder st ad af t er t he execut i on of t he

cont r act , J ose st at ed t hat he under st ood t hat Nat i onal Pl ast i cs had

been buyi ng t he agr eed mat er i al s f r om Tor ay, i nvoi ci ng i t s own

cust omer f or t he same amount as i t had pai d Toray f or t he

mat er i al s, t hen recei vi ng i t s t wel ve per cent commi ssi on based on

t hat amount . J ose pr oposed i nst ead t hat Goder st ad r ai se t he pr i ces

t hat Nat i onal Pl ast i cs was char gi ng t o a l evel such t hat , af t er t he

t wel ve percent commi ss i on was deduct ed, Tor ay woul d "r ecei ve the

same l evel of pr i ci ng ( or pr et t y cl ose t o i t ) t hat [ i t ] di d pr i or

t o [ t he Set t l ement Agr eement ] . " That suggest s, at a mi ni mum, t hat

Nat i onal Pl ast i cs coul d i n f act sel l t he pr oduct f or pr i ces si mi l ar

t o t hose of Tor ay. Mor eover , Tor ay was obl i gat ed under t he

Set t l ement Agr eement t o shar e sal es l eads r egardi ng t he agr eed

mat er i al s wi t h Nat i onal Pl ast i cs, suggest i ng t hat t he cust omer

bases and sal es vol umes of t he two compani es woul d be compar abl e.

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A r easonabl e j ur y coul d concl ude f r omt hi s evi dence t hat

t wel ve per cent of Tor ay' s r evenues f r om di r ect sal es of aged f i l m

t o thi r d par t i es - - sal es t hat , under t he Set t l ement Agr eement ,

shoul d have been done t hr ough Nat i onal Pl ast i cs - - was a rat i onal

est i mat e of damages.

Toray r esi st s t hi s concl usi on, ar gui ng t hat i t

"r out i nel y" sol d f i l m t hi r t een mont hs ol d or ol der t o i t s regul ar

cust omer s wi t hout di scount and i ncl udi ng a warr ant y. Because

Nat i onal Pl ast i cs coul d not sel l pl ast i c f i l mi nt o pr i mar y mar ket s

compl et e wi t h war r ant y, Tor ay cont ends, i t i s not possi bl e that

Nat i onal Pl ast i cs coul d have ear ned t he same r evenues f r omsal es of

t he f i l mas Tor ay di d. But t hi s ar gument r est s on t he pr emi se t hat

f i l m t hi r t een mont hs ol d or ol der had no oper at i onal di f f er ence

f r om f i l m l ess t han one year ol d and coul d be sol d i nt o pr i me

market s at t he pr i me market pr i ce. The j ur y di d not have t o accept

t hat pr emi se or cr edi t t he t est i mony of t he wi t nesses who test i f i ed

t o i t s val i di t y. I nst ead, t he j ur y coul d have i nf er r ed, based on

t he evi dence t hat Tor ay took an account i ng r eserve agai nst f i l mat

age thi r t een mont hs, t hat t he f i l m became l ess val uabl e at t hat

poi nt and t hus was l i kel y t o be moved t o a br oker f or sal e i nt o a

secondary market wi t hout a war r ant y.

Geor ge v. Geor ge F. Ber kander , I nc. , 169 A. 2d 370 ( R. I .

1961) , t he case upon whi ch Tor ay pl aces pr i nci pal r el i ance, does

not compel a di f f er ent r esul t . I n Geor ge, t he pl ai nt i f f had

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l i censed t he def endant t o use a manuf actur i ng pr ocess i nvent ed by

t he pl ai nt i f f . I d. at 370- 71. The def endant agr eed t o pay t he

pl ai nt i f f a r oyal t y f or i t ems made and sol d usi ng t he pr ocess and

t o sel l such i t ems onl y out si de of Rhode I sl and. I d. at 371. When

t he def endant sol d i t ems i n Rhode I sl and i n cont r avent i on of t he

agr eement , t he pl ai nt i f f sued and sought t o recover t he def endant ' s

pr of i t s as par t of hi s damages. I d. The Rhode I sl and Supr eme

Cour t , adher i ng t o t he t r adi t i onal "expect at i on" measure of damages

f amousl y ar t i cul at ed i n Hadl ey v. Baxendal e, 9 Exch. 341 ( 1854) ,

hel d t hat t he pl ai nt i f f ' s r equest was i mper mi ssi bl e because t he

pl ai nt i f f had pr esent ed no evi dence that i t woul d have ear ned t hose

pr of i t s had t he def endant f ul f i l l ed t he t er ms of t he cont r act . See

Geor ge, 169 A. 2d at 372- 73. Geor gesi mpl y st ands f or t he f ami l i ar

pr oposi t i on t hat t he pr oper measure of damages i n a br each of

cont r act act i on i s t hat whi ch "wi l l ser ve t o put t he i nj ur ed par t y

as cl ose as i s r easonabl y possi bl e t o t he posi t i on he woul d have

been i n had t he cont r act been f ul l y per f or med. " I d. at 372. As

expl ai ned above, i n t hi s case, a r easonabl e j ur y coul d have

concl uded t hat a damages award equal t o Toray' s r evenues f r om

sel l i ng f i l m ol der t han one year accompl i shed t hat pur pose. Cf .

RBC Ni ce Bear i ngs, I nc. v. SKF USA, I nc. , 78 A. 3d 195, 212 ( Conn.

App. Ct . 2013) ( hol di ng t hat def endant al l egi ng br each of a

cont r act under whi ch i t was t he excl usi ve di st r i but or of cer t ai n

pr oducts coul d use t he pl ai nt i f f s' pr of i t s f r om sal es of t hose

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pr oduct s t o ot her par t i es as i t s measure of damages because " i t

woul d be nei t her specul at i ve nor t oo r emot e . . . t o concl ude that

t he def endant , t he excl usi ve di st r i but or of [ t hose pr oduct s] , woul d

have been i n t he posi t i on t o sel l t he pr oduct [ s] t o t he cust omer s

who pur chased di r ect l y f r om t he pl ai nt i f f s") .

I n f ur t her suppor t of i t s ar gument t hat t he j ur y' s

damages awar d i n t hi s case was specul at i ve, Tor ay ci t es sever al

ant i t r ust cases appl yi ng t he "yar dst i ck" method of damages

measurement , under whi ch a pl ai nt i f f can "measure i t s damages wi t h

r ef erence t o t he per f ormance of one or more cl osel y comparabl e

f i r ms i n t he same i ndust r y that , unbur dened by the pr oscr i bed

ant i compet i t i ve act i vi t y, successf ul l y managed t o ear n pr of i t s. "

Home Pl acement Ser v. , I nc. v. Pr ovi dence J our nal Co. , 819 F. 2d

1199, 1205- 06 ( 1st Ci r . 1987) . We f i nd t hese cases unhel pf ul i n

t he pr esent cont ext . Thi s i s not an ant i t r ust case; i t i s an

act i on f or br each of cont r act , and a uni que one at t hat . I n or der

t o set t l e pendi ng cl ai ms agai nst each ot her , Tor ay and Nat i onal

Pl ast i cs agr eed t o do busi ness t oget her over a sevent een- year

per i od pur suant t o t he terms of a Set t l ement Agr eement honed

t hr ough extensi ve negot i at i on. And as descr i bed above, a j ur y

coul d r easonabl y concl ude, based on evi dence of t he par t i es'

i nt ent , t hat t wel ve per cent of Tor ay' s r evenues f r om i t s br eachi ng

t he Set t l ement Agr eement was a reasonabl e est i mate of Nat i onal

Pl ast i cs' l oss as a r esul t of Tor ay' s r ef usal t o do busi ness

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accor di ng t o t he agr eement ' s t erms. No more i s r equi r ed under

Rhode I sl and l aw.

V.

We af f i r mt he deci si on of t he di st r i ct cour t . Cost s ar e

awar ded t o Nat i onal Pl ast i cs.

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Documents

T G Plastics Trading Co., Inc. v. Toray Plastics (America), Inc., 1st Cir. (2014)