Faiveley Transport USA, Inc. v. Wabtec Corp. , 511 F. App'x 54 ( 2013 )

11-3518-cv (L)
Faiveley Transport v. Wabtec Corp.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
1 At a stated term of the United States Court of Appeals
2 for the Second Circuit, held at the Thurgood Marshall United
3 States Courthouse, 40 Foley Square, in the City of New York,
4 on the 6th day of February, two thousand thirteen.
5
6 PRESENT: DENNIS JACOBS,
7 Chief Judge,
8 ROSEMARY S. POOLER,
9 DENNY CHIN,
10 Circuit Judges.
11
12 - - - - - - - - - - - - - - - - - - - -X
13 FAIVELEY TRANSPORT USA, INC.,
14 FAIVELEY TRANSPORT NORDIC AB,
15 FAIVELEY TRANSPORT AMIENS S.A.S.,
16 ELLCON NATIONAL, INC.,
17 Plaintiffs-Appellees/Cross-
18 Appellants,
19
20 -v.- 11-3518-cv (Lead)
21 11-3629-cv (XAP)
22
23 WABTEC CORPORATION,
24 Defendant-Appellant/Cross-
25 Appellee.
26 - - - - - - - - - - - - - - - - - - - -
27
1
1 FOR APPELLANT/CROSS-APPELLEE: JAMES C. MARTIN (Colin
2 E. Wrabley, Paige H.
3 Forester, on the
4 brief), Reed Smith LLP,
5 Pittsburgh, PA.
6
7 FOR APPELLEES/CROSS-APPELLANTS: ANDREW JOHN PINCUS (A.
8 John Peter Mancini,
9 Mayer Brown LLP, New
10 York, NY on the brief),
11 Mayer Brown LLP,
12 Washington, DC.
13
14 Appeal from a judgment of the United States District
15 Court for the Southern District of New York (Rakoff, J.).
16
17 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
18 AND DECREED that the judgment awarding damages is VACATED
19 and REMANDED to the district court for a new trial limited
20 to the issue of damages unless Faiveley agrees to a
21 remittitur reducing the amount of damages to $15 million
22 ($4.5 million in past damages, and $10.5 million in future
23 damages), plus interest. In all other respects, the
24 judgment is AFFIRMED.
25
26 Wabtec Corporation appeals from the judgment of the
27 United States District Court for the Southern District of
28 New York (Rakoff, J.), denying its motion for a judgment as
29 a matter of law, or alternatively, a new trial. The
30 Faiveley plaintiffs cross-appeal from the court’s dismissal
31 of their claim for punitive damages. We assume the parties’
32 familiarity with the underlying facts, the procedural
33 history, and the issues presented for review.
34 Wabtec argues that the Faiveley plaintiffs lack
35 standing to bring their claims because they had no express
36 exclusive license to the trade secrets. “We review
37 questions of standing de novo.” Carver v. City of New York,
38 621 F.3d 221, 225 (2d Cir. 2010). Wabtec ignores the
39 requirements for a successful misappropriation claim, which
40 we defined in an earlier iteration of this very case: “(1)
41 that [Faiveley] possessed a trade secret, and (2) that
42 [Wabtec] used that trade secret in breach of an agreement,
43 confidential relationship or duty, or as a result of
44 discovery by improper means.” Faiveley Transport Malmo AB
45 v. Wabtec Corp., 559 F.3d 110, 117 (2d Cir. 2009) (citation
46 omitted and emphasis added). That definition is law of the
47 case, and does not include the word “exclusive.” The
2
1 Faiveley plaintiffs were the only entities in possession of
2 the brake trade secrets in the United States. That is
3 enough for standing to sue.
4 Wabtec invokes res judicata to argue that the Tribunal
5 foreclosed any Faiveley damages on the merits. “We review
6 de novo the district court's application of the principles
7 of res judicata.” O'Connor v. Pierson, 568 F.3d 64, 69 (2d
8 Cir. 2009). The Tribunal expressly held that Malmo could
9 “only claim damages suffered by itself,” i.e., not on behalf
10 of the Faiveley plaintiffs. The Tribunal explicitly did not
11 pass judgment on the Faiveley damages, in part because the
12 Faiveley plaintiffs would potentially “still [have been]
13 entitled to claim damages against [Wabtec] before another
14 jurisdiction.” That statement can only mean that the
15 Tribunal’s disposition was not made on the merits. The
16 Tribunal’s decision not to consider Faiveley damages on the
17 merits is not res judicata to their claims here because
18 “[i]n ordinary circumstances a second action on the same
19 claim is not precluded by dismissal of a first action for
20 prematurity or failure to satisfy a precondition to suit.”
21 18A Charles Alan Wright & Arthur R. Miller, Fed. Prac. &
22 Proc. § 4437 (2d ed. 2012).
23 Wabtec also takes issue with the jury’s award of
24 damages. “Where the district court has decided whether
25 and/or to what extent the jury's verdict was excessive, its
26 decision is reviewable only for abuse of discretion.”
27 Rangolan v. County of Nassau, 370 F.3d 239, 245 (2d Cir.
28 2004). First, Wabtec argues that the Faiveley plaintiffs
29 should not be entitled to any “future” damages. However,
30 considering that the Tribunal itself awarded future damages
31 (through 2011) and also predicted that the Faiveley damages
32 would be substantially greater than those it awarded to
33 Malmo in the arbitration, the award of future damages here
34 is appropriate. The district court did not abuse its
35 discretion in affirming the jury’s future damages award of
36 $10.5 million.
37 Wabtec’s argument regarding damages for past conduct is
38 more compelling. The company contends that in calculating
39 the amount of Wabtec’s unjust enrichment, the jury did not
40 properly deduct the $4.1 million arbitration award that
41 Wabtec paid to Malmo (a $3.9 million royalty award with
42 $200,000 in interest). Faiveley’s damages expert conceded
43 on cross-examination that his calculation of $7.6 million in
44 ill-gotten Wabtec profits excluded any consideration of that
45 payment, demurring that the decision of whether to subtract
46 the arbitration royalty was “a legal question.” The jury
47 subsequently calculated Faiveley’s past damages as $7.6
3
1 million in unjust enrichment, or $4.5 million in lost
2 profits. Thus, it appears that the jury accepted the
3 expert’s $7.6 million recommendation without any adjustment
4 whatsoever, an oversight that is significant and
5 quantifiable.
6 Remittitur is appropriate when “the court can identify
7 an error that caused the jury to include in the verdict a
8 quantifiable amount that should be stricken.” Trademark
9 Research Corp. v. Maxwell Online, Inc., 995 F.2d 326, 337
10 (2d Cir. 1993) (citation omitted). Since Wabtec effectively
11 paid a $3.9 million royalty fee for its use of the brake
12 trade secrets, this expense directly decreased the extent to
13 which Wabtec was unjustly enriched, and should have been
14 discounted from its profits. Subtracting the $3.9 million
15 amount from the $7.6 million award leaves $3.7 million.
16 However, the jury also alternatively calculated Faiveley’s
17 lost profits to be $4.5 million, a higher figure which was
18 not tainted by the oversight on the arbitration payment
19 (since the Faiveley plaintiffs’ compensatory damages were
20 expressly not addressed by the Tribunal). The Faiveley
21 plaintiffs should therefore be given the choice of either
22 [i] a remittitur, decreasing their past damages award by
23 $3.1 million to the higher compensatory amount of $4.5
24 million, or [ii] a new damages trial. See 11 Wright &
25 Miller at § 2815 (“[T]he court may condition a denial of the
26 motion for a new trial upon the filing by the plaintiff of a
27 remittitur in a stated amount. In this way the plaintiff is
28 given the option of either submitting to a new trial or of
29 accepting the amount of damages that the court considers
30 justified.”).
31 Wabtec also asserts that the district court improperly
32 excluded the testimony of one of its three expert witnesses,
33 Dr. Aly Badawy, emphasizing that the district court did not
34 sufficiently explain its decision. The district court’s
35 decision regarding the admissibility of expert testimony
36 “must be sustained unless manifestly erroneous.” Trademark
37 Research Corp., 995 F.2d at 338. There was no manifest
38 error here. Expert testimony may be excluded if it is based
39 upon unreliable, speculative assumptions. See, e.g.,
40 Boucher v. U.S. Suzuki Motor Corp., 73 F.3d 18, 21 (2d Cir.
41 1996). Dr. Badawy’s expert testimony included sweeping
42 statements that were detached from the actual evidence.
43 While Wabtec may have understandably desired a fuller
44 explanation, the district court did not abuse its discretion
45 by excluding Dr. Badawy’s testimony in a summary ruling.
46 See, e.g., United States v. Locascio, 6 F.3d 924, 939 (2d
47 Cir. 1993) (“[W]e assume that the district court
4
1 consistently and continually performed a trustworthiness
2 analysis sub silentio of all evidence introduced at trial.
3 We will not, however, circumscribe this discretion by
4 burdening the court with the necessity of making an explicit
5 determination for all expert testimony.”).
6 Finally, the Faiveley plaintiffs cross-claim, arguing
7 that the district court should have permitted the jury to
8 consider whether to award them punitive damages. “The
9 district court's determination that punitive damages are
10 unwarranted as a matter of law is reviewed de novo.” New
11 Windsor Volunteer Ambulance Corps, Inc. v. Meyers, 442 F.3d
12 101, 121 (2d Cir. 2006). The Tribunal did not characterize
13 Wabtec’s behavior in an extreme light, and expressly
14 permitted Wabtec to “continue to use its reverse engineered
15 drawings” after making its royalty damages payment. Under
16 these circumstances, the district court’s decision on
17 punitive damages is appropriate.
18 Finding no merit in the parties’ remaining arguments,
19 we VACATE the judgment awarding damages and REMAND to the
20 district court for a new trial limited to the issue of
21 damages unless Faiveley agrees to a remittitur reducing the
22 amount of damages to $15 million ($4.5 million in past
23 damages, and $10.5 million in future damages), plus
24 interest. In all other respects, the judgment is AFFIRMED.
25
26
27 FOR THE COURT:
28 CATHERINE O’HAGAN WOLFE, CLERK
29
5