Tharo Systems v. cab Produkttechnik , 196 F. App'x 366 ( 2006 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 06a0633n.06
Filed: August 24, 2006
No. 05-3876
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
THARO SYSTEMS, INC., )
)
Plaintiff-Appellee, )
)
v. ) ON APPEAL FROM THE UNITED
) STATES DISTRICT COURT FOR THE
cab PRODUKTTECHNIK GmbH & CO. KG, ) NORTHERN DISTRICT OF OHIO
)
Defendant-Appellant. )
Before: DAUGHTREY and COOK, Circuit Judges; and COLLIER, District Judge.*
COOK, Circuit Judge. After finding that Defendant cab Produkttechnik GmbH & Co. Kg
(“cab”) breached its contract with Plaintiff Tharo Systems, Inc. (“Tharo”), a jury awarded over i6
million (Euros) in damages to Tharo. cab filed several post-judgment motions, seeking, among other
things, judgment as a matter of law, a new trial, and remittitur. The magistrate judge1 granted
remittitur and reduced the damage award, which Tharo accepted, and also granted Tharo’s motion
*
The Honorable Curtis L. Collier, Chief United States District Judge for the Eastern District
of Tennessee, sitting by designation.
1
The parties consented to having a magistrate judge conduct the proceedings in the case,
including the trial. See 28 U.S.C. §636(c); Fed. R. Civ. P. 73. This opinion uses the terms
“magistrate judge” and “trial court” interchangeably.
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Tharo Sys. v. cab Produkttechnik
for prejudgment interest. cab now appeals asserting various grounds for reversal. With the
exception of one issue that the parties agree requires a remand, we affirm.
I.
Tharo, an Ohio corporation, develops software for printing computerized bar code labels and
sells and services special printers designed to print the labels and affix them to products. cab, a
German corporation, manufactures the printers and label applicators. The parties’ commercial
relationship started in the mid-1980s and continued through 2003. In the 1990s, the parties explored
the possibility of a joint venture aimed at designing and building their own label-printing system to
be marketed worldwide. Negotiations culminated in 1996 with the signing of a Letter of
Understanding (“LOU”) intended to allow the parties “to work together . . . to become independent
of other manufacturers.” The LOU referred to the parties’ relationship as the “CTC partnership.”
Some eight years later, Tharo terminated the LOU after learning that cab intended to
establish its own distribution networks in the U.S., in violation of the LOU, and had not been
providing Tharo with “preferred pricing.” In accordance with the LOU (Point 10), Tharo requested
that cab provide Tharo with “full information” to enable Tharo to continue selling products
following the partnership’s dissolution. Specifically, Tharo requested “printer and board schematics,
and firmware source code[s]” for several lines of printers. In its written response, cab asserted that:
the LOU did not represent a contract; it never acted contrary to the LOU; and in any event, certain
information requested was for printers not covered by the LOU.
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Tharo filed a complaint in state court, alleging (as later amended) that cab breached the
parties’ contract by overcharging Tharo (the “overcharge claim”) and by refusing to supply the
requested “source codes” (the “failure-to-provide-information claim”). cab removed the case to
federal court and filed a Fed. R. Civ. P. 12(b)(2) motion to dismiss for lack of personal jurisdiction,
which the trial court denied.
The week before trial, cab filed a motion in limine seeking to preclude Tharo’s expert
accounting witness, Robert Brlas, from testifying. The magistrate judge, after a hearing, denied the
motion, finding Brlas qualified as an expert and his testimony “relevant and reliable.” The trial
resulted in a jury verdict for Tharo on both claims and a total damages award of just over i6.7
million—some i1.0 million on the overcharge claim and about i5.7 million on the failure-to-
provide-information claim.
Post-trial, Tharo moved to alter or amend the judgment to include prejudgment interest on
the entire damages award. cab, on the other hand, moved for judgment as a matter of law or for a
new trial on the failure-to-provide-information claim. Alternatively, cab moved for remittitur on
this claim. The magistrate judge denied the motions for judgment as a matter of law and new trial,
but ordered the damages on the failure-to-provide-information claim remitted to approximately i1.7
million, conditioned on Tharo’s acceptance. Tharo later accepted, after which the magistrate judge
awarded Tharo prejudgment interest on the revised damages award on both claims and then entered
final judgment. cab now appeals.
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II.
A. Personal Jurisdiction
As a threshold matter we “conduct a plenary review of [the] personal jurisdiction issue.”
CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1262 (6th Cir. 1996). Tharo, as the party asserting
personal jurisdiction, “bears the burden of showing such jurisdiction exists.” Id. To defeat the
motion, Tharo need only make a prima facie showing of jurisdiction. Id. And, because the trial
court ruled without conducting an evidentiary hearing, we must consider the pleadings and affidavits
in a light most favorable to Tharo (the non-moving party), Theunissen v. Matthews, 935 F.2d 1454,
1458 (6th Cir. 1991), and we cannot “weigh the controverting assertions of the party seeking
dismissal.” CompuServe, 89 F.3d at 1262 (quotation omitted); see also Intera Corp. v. Henderson,
428 F.3d 605, 614 (6th Cir. 2005).
In a diversity case, a federal court can exercise personal jurisdiction over a defendant if
jurisdiction is “(1) authorized by the law of the state in which it sits[,] and (2) in accordance with
the Due Process Clause of the Fourteenth Amendment.” Neogen Corp. v. Neo Gen Screening, Inc.,
282 F.3d 883, 888 (6th Cir. 2002).
1. Ohio’s Long-Arm Statute
Under Ohio’s long-arm statute, “[a] court may exercise personal jurisdiction over a person
who acts directly or by an agent, as to a cause of action arising from the person’s . . . [t]ransacting
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any business in this state.” Ohio Rev. Code § 2307.382(A). The injury must also arise out of the
contacts with Ohio. Brunner v. Hampson, 441 F.3d 457, 463 (6th Cir. 2006) (interpreting Ohio Rev.
Code § 2307.382(C)).
On the strength of the Ohio Supreme Court’s broad reading of the phrase “transacting any
business,” we agree that cab transacted business in Ohio. See Ky. Oaks Mall Co. v. Mitchell’s
Formal Wear, 559 N.E.2d 477, 480 (Ohio 1990) (“‘Transact’ . . . embraces in its meaning the
carrying on or prosecution of business negotiations . . . and may involve business negotiations which
have been either wholly or partly brought to a conclusion.”). cab and Tharo carried on a business
relationship in Ohio for over 15 years. Moreover, as the trial court concluded, because “the LOU
was the basis of cab’s transactions in Ohio, and [because] Tharo’s claims are for breach of the LOU,
the cause of action . . . arises from cab’s transactions in Ohio.” Accordingly, we agree that Ohio’s
long-arm statute authorizes jurisdiction over cab.
2. Due Process
Due process mandates that jurisdiction be exercised only if cab has sufficient “minimum
contacts” with Ohio such that summoning cab to defend in Ohio would not offend “traditional
notions of fair play and substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)
(quotation omitted). We use a three-part test for determining whether the exercise of personal
jurisdiction over an out-of-state defendant comports with due process:
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First, the defendant must purposefully avail himself of the privilege of acting in the
forum state or causing a consequence in the forum state.
Second, the cause of action must arise from the defendant’s activities there.
Finally, the acts of the defendant or consequences caused by the defendant must have
a substantial enough connection with the forum state to make the exercise of
jurisdiction over the defendant reasonable.
Chandler v. Barclays Bank PLC, 898 F.2d 1148, 1151 (6th Cir. 1990) (quotation omitted); see S.
Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374 (6th Cir. 1968).
1. “Purposeful Availment.” The court may not exercise personal jurisdiction over cab unless
cab has purposefully entered into a connection with the forum “such that [it] should reasonably
anticipate being haled into court [in Ohio].” World-Wide Volkswagen Corp. v. Woodson, 444 U.S.
286, 297 (1980). This “ensures that [cab] will not be haled into [Ohio] solely as a result of
‘random,’ ‘fortuitous’ or ‘attenuated” contacts.” Burger King Corp. v. Rudzewicz, 471 U.S. 462,
475 (1985) (quotation omitted). Though “[t]he mere existence of a contract . . . is insufficient to
confer personal jurisdiction,” Calphalon Corp. v. Rowlette, 228 F.3d 718, 722 (6th Cir. 2000), when
“a nonresident defendant transacts business by negotiating and executing a contract via telephone
calls and letters to an Ohio resident, then the defendant has purposefully availed himself of the
forum by creating a continuing obligation in Ohio.” Cole v. Mileti, 133 F.3d 433, 436 (6th Cir.
1998); see LAK, Inc. v. Deer Creek Enterprises, 885 F.2d 1293, 1300 (6th Cir. 1989) (“[W]ith
respect to interstate contractual obligations . . . parties who ‘reach out beyond one state and create
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continuing relationships and obligations with citizens of another state’ are subject to regulation and
sanctions in the other State for the consequences of their activities.” (quotation omitted)).
Tharo made a prima facie showing that cab purposefully availed itself of the privilege of
acting in Ohio. Looking at the quality and quantity of cab’s contacts with Ohio we agree with the
trial court that cab “consciously reached out from [Germany] to Ohio” to create an ongoing business
relationship. CompuServe, 89 F.3d at 1266. cab frequently negotiated with Tharo through telephone
calls, e-mails, and faxes directed to Ohio; cab officials visited Ohio (including a visit to finalize the
LOU); the LOU envisioned a long-term partnership; the parties communicated frequently after
executing the LOU, Tharo performed tasks in Ohio at cab’s direction; cab shipped printers to Ohio;
and cab’s employees traveled to Ohio in fulfilling cab’s contractual obligations.
cab, relying on Calphalon Corp. v. Rowlette, argues that its “contacts in Ohio with Tharo
[were] . . . ‘random,’ ‘fortuitous,’ and ‘attenuated,” and thus Tharo failed to make a prima facie
showing that cab purposefully directed its contacts to Ohio. We disagree. Calphalon was an Ohio
corporation. Rowlette was a Minnesota corporation and Calphalon’s exclusive representative in
Minnesota. Though Rowlette sent letters and faxes and made telephone calls to Ohio (and made
three trips to Calphalon’s facilities there for a tour and meetings), this court held that Ohio lacked
personal jurisdiction over Rowlette, Calphalon at 722, despite the existence of a contract. The court
concluded that Rowlette’s contacts with Ohio were too “fortuitous” or “attenuated” to support the
exercise of jurisdiction because Rowlette’s obligations under the agreement were to be performed
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outside of Ohio and because Rowlette was not seeking to exploit a market for Calphalon’s products
in Ohio. Id. at 723. The court also noted that Rowlette’s contacts with Ohio (by letter, telephone,
fax and personal visits there) resulted not because Rowlette chose to create continuous and
substantial consequences in Ohio, but because Calphalon chose to be headquartered there. Id.
cab’s contacts with Ohio, however, were not “solely a result of Tharo’s choice of location”
because cab affirmatively reached out to Tharo in Ohio to negotiate the LOU in an effort to
strengthen the parties’ mutual business relationship. In contrast, there is no mention in Calphalon
that Rowlette “reached out” to Ohio to negotiate with Calaphon. cab’s position is comparable to
the defendant’s in Burger King. See Burger King, 471 U.S. at 479 (noting that where a party
“deliberately ‘[reached] out beyond’ Michigan and negotiated with a Florida corporation . . . and the
manifold benefits that would derive [therefrom]. . . the ‘quality and nature’ of the relationship to
the company in Florida can in no sense be viewed as ‘random,’ ‘fortuitous,’ or ‘attenuated’” (citation
omitted) (first alternation in original)).
2. “Arising From.” If the cause of action has “a substantial connection with [cab’s Ohio]
activities,” the “arising from” prong of the three-part test is satisfied. S. Mach., 401 F.2d at 384
n.27. Put another way, the test is satisfied where “a defendant’s contacts with the forum state are
related to the operative facts of the controversy.” CompuServe, 89 F.3d at 1267.
As we have already held, cab “reached out” to Ohio and created a continuing contractual
obligation there. And because “the cause of action is for breach of that [obligation], . . . [it]
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naturally arises from the defendant’s activities in Ohio.” Cole, 133 F.3d at 436 (citing CompuServe,
89 F.3d at 1267 and In-Flight Devices Corp. v. Van Dusen Air, Inc., 466 F.2d 220, 229 (6th Cir.
1972)); see In-Flight Devices, 466 F.2d at 229 (“Defendant’s transaction of business in Ohio -- its
entering of a contractual relationship with an Ohio corporation -- is necessarily the very soil from
which the action for breach grew.”).
cab stresses that the “activities allegedly giving rise to Tharo’s claims . . . occurred outside
Ohio,” and concludes that the “arising from” prong has not been satisfied. But cab’s argument
overlooks that the operative facts regarding the formation and meaning of the LOU, a contract
negotiated and executed by Tharo in Ohio, are substantially connected with cab’s Ohio activities.
Given this substantial connection, it matters not that the actual breach (the overcharge and the failure
to provide the source codes) may have occurred in Germany in assessing the “arising from” prong
of the due process analysis. Cf. LAK, Inc., 885 F.2d at 1303 (commenting that if the contract at the
center of the dispute had borne a more substantial relationship to the forum, it would not have been
necessary for the activities giving rise to the breach to actually have occurred in the forum).
3. “Reasonableness.” Though we “consider several factors . . . , including the burden on the
defendant, the interest of the forum state, [and] the plaintiff’s interest in obtaining relief,”
CompuServe, 89 F.3d at 1268 (quotation omitted), in assessing the reasonableness of asserting
personal jurisdiction over cab, where, as here, the first two prongs of the due process inquiry have
been satisfied, we will “presume the specific assertion of personal jurisdiction was proper.” Cole,
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133 F.3d at 436 (citing CompuServe, 89 F.3d at 1268 and First Nat’l Bank of Louisville v. J.W.
Brewer Tire Co., 680 F.2d 1123, 1126 (6th Cir. 1982)); see S. Mach., 401 F.2d at 384 (“[O]nce the
first two questions have been answered affirmatively, resolution of the third involves merely
ferreting out the unusual cases where that interest cannot be found.”).
Nothing suggests this is one of those “unusual cases.” Ohio has a strong interest in resolving
a suit brought by an Ohio company for breach of a multimillion dollar business agreement.
Likewise, Tharo has a strong interest in obtaining relief in Ohio. We acknowledge, as did the trial
court, that the “unique burdens placed upon [international defendants] should [be given] significant
weight in assessing the reasonableness of [exercising long-arm jurisdiction].” Asahi Metal Indus.
Co. v. Superior Court of Cal., 480 U.S. 102, 114 (1987). But “[w]hen minimum contacts have been
established, often the interests of the plaintiff and the forum in the exercise of jurisdiction will
justify even the serious burdens placed on the alien defendant.” Id. cab’s alien status alone is
insufficient to persuade us that exercising jurisdiction is unreasonable, and nothing else cab points
to overcomes the presumption that the exercise of jurisdiction was proper.
Because the exercise of personal jurisdiction over cab is authorized by Ohio law and in
accordance with due process, we affirm the decision to deny cab’s motion to dismiss.
B. Remittitur
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The jury found that cab breached the LOU by failing to deliver “full information” to Tharo,
including the “source codes” for certain printers covered by the LOU. At trial, Tharo’s president,
Thomas Thatcher, testified that the company would lose just over i5 million in profits because of
this breach. As an alternative measure, Brlas, Tharo’s expert accounting witness, testified that
because of the breach—that is, without the information cab was required to provide—it would cost
Tharo approximately i1.7 million more to develop the technology than if it had the information.
The jury awarded over i5.7 million to Tharo on this claim.2
Post-verdict, cab filed a “Motion for Judgment as a Matter of Law, New Trial, or in the
alternative, Remittitur.” In requesting remittitur, cab pointed out that a court should order a
remittitur if the jury’s verdict is beyond the maximum damages that the jury reasonably could find
to be compensatory for a party’s loss. See Champion v. Outlook Nashville, Inc., 380 F.3d 893, 905
(6th Cir. 2004) (quotation omitted). cab further stressed that remittitur is “particularly appropriate
where damages estimates offered by a witness are too speculative to support a jury’s damages
award,” and concluded by arguing that “the evidence does not support either of Tharo’s alternative
theories of damages on [the failure-to-provide-information claim]. . . . [T]his Court should reduce
the damages by ordering a remittitur.” As cab explained in its reply brief, “the trial court could have
entered judgment in cab’s favor on [this claim], granted a new trial, or in the alternative, found that
[the claim] was not supported by any damages and remitted [the award] to zero.”
2
It is unclear how the jury arrived at this final amount—an amount that exceeds either of the
two alternative measures submitted by Tharo.
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The magistrate judge agreed that Thatcher’s lost profits testimony was too speculative to
support the damages award with reasonable certainty and also agreed that the jury’s award exceeded
“the maximum that . . . could reasonably . . . be compensatory.” Then, after noting there was “ample
evidence of the developmental costs estimation of damages [as provided by Brlas’s testimony]” the
magistrate judge (conditionally) remitted Tharo’s damages on the failure-to-provide-information
claim to approximately i1.7 million, which Tharo accepted. cab now argues that after finding
Thatcher’s lost profits testimony too speculative to support the jury’s award, “the trial court should
have ordered a new trial on Tharo’s . . . damages for developmental costs.” (Emphasis added.) We
find that the invited-error doctrine precludes cab’s challenge.
Under the invited-error doctrine, “a party may not complain on appeal of errors that he
himself invited or provoked the court . . . to commit.” Toth v. Grand Trunk R.R., 306 F.3d 335, 354
(6th Cir. 2002) (quotation omitted) (alteration in original). The magistrate judge granted cab’s
motion for remittitur; yet it is cab that “now cries foul on appeal,” complaining that the case should
have been remanded for a new trial on the damages issue. Because it was cab that presented the trial
court with the option of granting the motion for remittitur as an alternative to ordering a new trial,
cab cannot argue on appeal that the trial court erred by ordering a remittitur in place of a new trial,
even if cab is not satisfied with the amount of the remittitur.
cab contends on appeal that because it asked the trial court to remit the damages award to
zero and because it was actually Tharo “that specifically invited the trial court to . . . remit the . .
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. judgment to [i1.7 million],” the invited-error doctrine is inapplicable. But given that cab assigns
error to the magistrate judge’s failure to order a new trial, it is irrelevant which party first suggested
the i1.7 million figure. cab initially requested remittitur, and cab now argues the magistrate judge
erred by ordering remittitur instead of a new trial. Under these circumstances, we find that the
invited-error doctrine bars cab’s appellate challenge.
C. Expert Testimony
cab next argues that the trial court failed to carry out its gatekeeping responsibilities and
erroneously permitted Brlas to testify as an expert. In his testimony, Brlas opined on the amount
of damages Tharo suffered from cab’s breach. He estimated the amount cab overcharged Tharo, and
he estimated the value to Tharo of the technological information that cab failed to provide.
We review de novo whether the trial court abdicated its gatekeeping role. See Bureau v.
State Farm Fire & Cas. Co., 129 Fed. Appx. 972, 975 (6th Cir. 2005) (citing Pride v. BIC Corp.,
218 F.3d 566, 578 (6th Cir. 2000) and Goebel v. Denver & Rio Grande Western R.R., 215 F.3d
1083, 1087-88 (10th Cir. 2000)). But we review the trial court’s decision to admit expert testimony
under Fed. R. Evid. 702 and Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993), as well
as any decisions regarding how to determine the admissibility of the evidence, for an abuse of
discretion. See Morales v. Am. Honda Motor Co., 151 F.3d 500, 515 (6th Cir. 1998); see also
Nelson v. Tenn. Gas Pipeline Co., 243 F.3d 244, 248 (6th Cir. 2001) (citing Kumho Tire Co. v.
Carmichael, 526 U.S. 137 (1999)).
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Admissibility of expert testimony is governed primarily by Fed. R. Evid. 702:
If scientific, technical, or other specialized knowledge will assist the trier of fact to
understand the evidence or to determine a fact in issue, a witness qualified as an
expert by knowledge, skill, expertise, training, or education, may testify thereto in
the form of an opinion or otherwise.
In Daubert, the Supreme Court provided guidance for the application of Rule 702, explaining that
trial courts, as “gatekeepers,” must determine
whether the expert is proposing to testify to (1) scientific knowledge that (2) will
assist the trier of fact to understand or determine a fact in issue. This entails a
preliminary assessment of whether the reasoning or methodology underlying the
testimony is scientifically valid and of whether the reasoning or methodology
properly can be applied to the facts in issue.
Daubert, 509 U.S. at 592-93. Accordingly, a trial court must ensure an expert is qualified and that
his proffered testimony is “not only relevant, but reliable.” Daubert, 509 U.S. at 589 (footnote
omitted).3
The trial court here fulfilled its gatekeeping role. In response to cab’s motion to preclude
Brlas’s testimony, filed just six days before he was scheduled to testify, the magistrate judge (after
allowing cab the opportunity to supplement its motion) reviewed the parties’ briefing, held a
Daubert hearing, and concluded:
I’ve heard the arguments and we’ve had the evidentiary hearing in this case. It’s my
finding that Mr. Brlas is both qualified as an expert to testify on the matters for
3
The Supreme Court has held that “Daubert’s general holding -- setting forth the trial judge’s
general ‘gatekeeping’ obligation -- applies not only to testimony based on ‘scientific’ knowledge,
but also to testimony based on . . . ‘other specialized’ knowledge.” Kumho Tire, 526 U.S. at 141;
see also First Tennessee Bank Nat’l Ass’n v. Barreto, 268 F.3d 319, 334-35 (6th Cir. 2001).
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which he’s offered, and that under the Daubert analysis and [Kumho] Tire analysis
that his testimony is also relevant and reliable, and therefore, his testimony would
be admissible. It seems to be that the arguments that have been made by [cab] go to
the weight and credibility to be given to his testimony, not to the underlying issues
of his qualifications and methodology. I find that the methodology he used is
acceptable and is accepted in the field.
cab challenged this ruling in its post-verdict motion and the trial court reaffirmed its holding,
explaining that
Mr. Brlas has been a certified public accountant (CPA) since 1981 and is a partner
at BBB [P]artners, where he specializes in financial analysis and business disputes.
. . . This Court has no doubt that an expert opinion on the value of certain
technology is relevant to the amount of damages resulting from failing to deliver [the
requested information]. . . . Mr. Brlas utilized a methodology called “benchmarking”
to estimate the cost to develop the technology at issue. . . . Mr. Brlas testified,
without rebuttal, that benchmarking is recognized in his profession as a method to
estimate cost and value; and he cited a cost accounting text book that referenced this
methodology. Based on all the foregoing, this Court reaffirms its prior finding that
Mr. Brlas’s testimony was admissible under Daubert.
The trial court’s analysis sufficiently establishes that it did not abdicate its gatekeeping role. Cf.
McGregor v. Paul Revere Life Ins. Co., 92 Fed. Appx. 412, 420 (9th Cir. 2004) (“While the trial
judge’s findings here were brief, they were sufficient to establish that she did not abdicate her
gatekeeping role.”).
Although cab argues that the trial court “merely [went] through the motions of having a
hearing and briefing process,” we cannot agree. cab cites cases holding that a trial court does not
fulfill its gatekeeping responsibilities where it “fails to consider an essential Daubert factor, such
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as reliability,” Naeem v. McKesson Drug Co., 444 F.3d 593, 608 (7th Cir. 2006), or where there is
“not a single explicit statement on the record [indicating] that trial court conducted any form of
Daubert analysis whatsoever,” Goebel, 215 F.3d at 1088. But as explained above, that is not this
case—nothing suggests that the trial court overlooked any of the Daubert factors.
We also reject cab’s argument that the trial court abused its discretion in finding Brlas
qualified to testify as an expert and in finding his testimony both reliable and relevant. A witness
must qualify as “an expert by knowledge, skill, experience, training or education.” Fed. R. Evid.
702. A witness is not “an expert simply because he claims to be.” Pride v. BIC Corp., 218 F.3d
566, 577 (6th Cir. 2000) (quotation omitted). Brlas is a certified public accountant who has testified
in nearly 100 trials and worked as an auditor at an international accounting firm. cab believes he
is not an expert because “[t]here is no evidence [he] is familiar with German accounting principles.”
Yet cab offers nothing to rebut Brlas’s testimony that there are no material “differences between
cab’s German financial statement and [the] typical U.S. financial statements” he regularly
encounters. Moreover, to the extent that Brlas “may have lacked familiarity with some aspects of
[German accounting], . . . such unfamiliarity merely affected the weight and credibility of his
testimony, not its admissibility.” First Tenn. Bank, 268 F.3d at 333.
With respect to reliability, cab contends that because Brlas mistranslated a word in cab’s
financial statements, his overcharge claim-related testimony was not reliable. Under cab’s
translation, 80% of the salaries under the heading “Gehalter,” should have been included in the
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production costs that Tharo was to pay cab. cab argues that Brlas’s mistranslation caused him to
exclude 100% of the salaries from his calculations, leading to an inflated damages estimate. cab
does not, however, challenge the underlying method Brlas used to determine the amount of the
overcharges. On cross-examination cab asked Brlas if his “production-related analysis” was too
narrow, and Brlas admitted it was “possible” that he “pulled out” too many salaries. Additionally,
cab’s accountant testified that 80-85% of the “gehalter” salaries should have been included.
Regardless of which translation is correct, the debate over whether to include these salaries is a fact
question—one the jury resolved against cab—that does not render Brlas’s testimony unreliable.
With respect to the failure-to-provide-information claim, cab again contends that Brlas did
not qualify as an expert because he had “no technical expertise on the [research and] development
of thermal transfer printers” and therefore “could not offer a reliable method for estimating
development costs.” But cab does not challenge the magistrate judge’s finding that Brlas, a CPA
specializing in financial analysis and business disputes, was qualified “to opine on the value of
technology,” with or without “technical expertise” in the field of thermal transfer printers.
cab also challenges the reliability of Brlas’s testimony relating to the failure-to-provide-
information claim. Relying on cab’s available financial documents, Brlas estimated the cost of
developing the technology using the “benchmarking” method. The magistrate judge summarized
benchmarking as: a “method that utilizes ratios to estimate cost or value in situations where
incomplete historical data exists.” Brlas testified that benchmarking is “a recognized method to
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determine things like cost and value,” which requires “accountants to use their best judgment in
coming up with estimates.” cab attacks the result Brlas reached but fails to demonstrate the
unreliability of Brlas’s valuation. Moreover, though cab points out that Brlas admitted he had never
before used benchmarking to estimate the value of technical information, cab does not argue that
the method itself is unreliable. cab was free to, and did, rigorously cross-examine Brlas in an effort
to cast doubt on his testimony. The verdict reflects that the jury credited Brlas’s opinion. We find
no abuse of discretion in admitting it.
Finally, cab argues that even if benchmarking could properly be used to determine its past
developmental costs, it “had no relevance to the issue of correlating cab’s past costs to Tharo’s
future costs.” As the magistrate judge explained, however, benchmarking uses historical data (such
as the cost of developing a product in the past) as a guide for estimating the cost of developing
similar products in the present—the very purpose of using the method is to estimate present costs
based on past costs. Brlas needed to estimate Tharo’s developmental costs because there was
insufficient data to do anything more.4
4
cab also contends that Brlas could not determine cab’s past development costs because he
did not have all the necessary financial information. Tharo responds that to the extent Brlas relied
on incomplete data it is because “cab did not retain any records of its [past] developmental costs.”
Cf. Jahn v. Equine Servs., PSC, 233 F.3d 382, 390 (6th Cir. 2000) (“Both experts noted that their
analysis was hampered by the lack of records, . . . and it seems patently unfair to allow [the party
seeking to exclude the experts testimony] to benefit from what seems to be a deplorable, and perhaps
even negligent, absence of record-keeping.”). cab fails to respond to Tharo’s argument.
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For these reasons we find that the trial court did not abuse its discretion in admitting Brlas’s
testimony. Our conclusion obviates cab’s request that “the panel sua sponte enter judgment in its
favor” on both claims
D. Prejudgment Interest
Tharo moved to alter or amend the judgment, pursuant to Fed. R. Civ. P. 59, asking for
prejudgment interest on its entire damages award. The magistrate judge awarded prejudgment
interest, a decision we review for an abuse of discretion. Clay v. Ford Motor Co., 215 F.3d 663, 672
(6th Cir. 2000). Whether the trial court had the authority to grant prejudgment interest, however,
is a question of state law. FDIC v. First Heights Bank, FSB, 229 F.3d 528, 542 (6th Cir. 2000).
Because we are sitting in diversity, we “must follow the controlling decisions of the Ohio Supreme
Court” on questions of Ohio state law. Henry v. Wausau Bus. Ins. Co., 351 F.3d 710, 713 (6th Cir.
2003) (citations omitted).
1. Prejudgment Interest on the Failure-to-Provide-Information Claim
Ohio Revised Code § 1343.03(A) governs a trial court’s authority to award prejudgment
interest on a breach of contract claim. It provides, in part, that a creditor is entitled to interest at the
statutory rate “when money becomes due and payable upon any . . . instrument of writing, . . . and
upon all judgments . . . for the payment of money arising out of . . . a contract.” cab argues Tharo’s
claims fall outside the scope of the statute because no money is “due and payable” to Tharo under
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No. 05-3876
Tharo Sys. v. cab Produkttechnik
the terms of the contract. That is, as alleged in the complaint, the LOU required cab to furnish the
requested information, which cab failed to do; but the LOU did not require cab to make any
payments to Tharo. Ohio law, however, does not support cab’s position.
In Royal Elec. Constr. Corp. v. Ohio State Univ., 652 N.E.2d 687 (Ohio 1995), the Supreme
Court of Ohio found that The Ohio State University breached a construction contract. The court
held that “to make the aggrieved party whole, the party should be compensated for the lapse of time
between accrual of the claim and judgment.” Id. at 692. Thus, “in a case involving a breach of
contract where liability is determined and damages are awarded . . . , the aggrieved party is entitled
to prejudgment interest.” Id.
Relying on this reasoning, Ohio courts (and this court) have held that the “language [of Ohio
Rev. Code §1343.03(A)] is not permissive nor ambiguous,” Dwyer Elec. v. Confederated Builders,
No. 3-98-18, 1998, Ohio App. LEXIS 5490, at *8 (Ohio Ct. App. Oct. 29,1998)—“once a party has
a judgment for an underlying contract claim . . . he is entitled to judgment as a matter of law.” Id.
at *5; see also Lincoln Elec. Co. v. St. Paul Fire & Marine Ins. Co., 210 F.3d 672, 693 (6th Cir.
2000) (noting, in summarizing Ohio-prejudgment interest law, that “[i]f a favorable judgment award
has been obtained by plaintiff, plaintiff has a right under [Ohio Rev. Code §]1343.03(A) to an
interest award as a matter of law, and the trial judge has no discretion not to grant any interest
award”); Local Mktg. Corp. v. Prudential Ins. Co. of Am., 824 N.E.2d 122, 126 (Ohio Ct. App.
2004) (rejecting an argument similar to cab’s as “ignor[ing] the statutory language that says that
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No. 05-3876
Tharo Sys. v. cab Produkttechnik
interest is appropriate under a judgment arising out of a contract”); Dayton Sec. Assocs. v. Avutu,
664 N.E.2d 954, 959 (Ohio Ct. App. 1995) (“[Section] 1343.03(A) reposes no discretion in the trial
court. . . . When the liability issue was determined in the Plaintiffs’ favor, they were then entitled
to prejudgment interest pursuant to the statute.”).
cab points the court to a recent Ohio appellate court decision, RPM, Inc. v. Oatey Co., Nos.
3282-M, 3289-M , 2005 Ohio App. LEXIS 1251 (Ohio Ct. App. Mar. 23, 2005), in which the court
declined to award prejudgment interest for breach of a confidentiality agreement, holding that by
the “explicit terms of [the statute], prejudgment interest is limited to those contracts that provide for
a payment of money that the breaching party failed to pay.” Id. at *38. RPM distinguished Royal
Electric on the ground that in that case there was no question that “there was in fact money owed
under the . . . terms of [the] contract”; rather, the “sole dispute” was over “whether [the plaintiff]
was entitled to . . . prejudgment interest . . . despite the fact that the amount of the debt was . . . not
reasonably capable of ascertainment.” Id. at *39-40. But as the dissent commented (and as the
weight of the authority suggests), “the net effect of the Royal Electric ruling is that prejudgment
interest is appropriate in contract claims. . . . Because of what was verbalized in [the contract],
money became due and payable when [the defendant] did what it did.” Id. at *43-44. That is,
money damages become due and payable on a contract at the time of the breach.
Alternatively, cab argues that “Tharo is still not entitled to . . . prejudgment interest on the
development costs because that money has never actually been spent.” But whether Tharo spent the
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No. 05-3876
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money to develop the technology matters not because, as Tharo explains, the i1.7 million damages
award represented the cost to recoup the property the contract promised but cab wrongfully withheld
from Tharo as of the date of the breach. Because Tharo presented evidence of its development costs
as a proxy for future lost profits, cab argues that “Tharo itself recognized development costs are
future damages.” But cab offers nothing to suggest that Tharo’s estimates did not represent the
present value of the breach, nor did it offer any such suggestion at trial.
We discern no abuse of discretion and affirm the decision to award prejudgment interest on
the failure-to-provide-information claim damages.
2. Prejudgment Interest the Overcharge Claim
The jury found that cab breached the LOU by overcharging Tharo and awarded Tharo just
over i1 million in damages. In addition to re-asserting its “no-money-due-and-payable” argument
against allowing prejudgment interest, cab also argues that Tharo is not entitled to prejudgment
interest because “Tharo did not lose the value of its money.” cab contends that the overcharge
damages were merely meant to allow Tharo to recover the overpayments it made to cab. The
Supreme Court of Ohio, however, has squarely rejected this argument. See Miller v. Gunckle, 775
N.E.2d 475, 480-81 (Ohio 2002) (“[I]nterest is allowed, not only on account of the loss which a
creditor may be supposed to have sustained by being deprived of the use of his money, but on
account of the gain made from its use by the debtor.” (quotation omitted)). Tharo had no
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No. 05-3876
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responsibility to explain what it would have done with the money had it not wrongfully overpaid
cab.
Accordingly, we affirm the decision to award prejudgment interest. But inasmuch as the
parties agree that the magistrate judge used an incorrect date in determining when prejudgment
interest stopped accruing on the overcharge claim, we remand the case for the limited purpose of
determining the correct end date and recalculating the amount of prejudgment interest Tharo is
entitled to on this claim.
E. Present-Value Instruction
cab contends that the trial court erred by not instructing the jury to reduce Tharo’s damages
on the failure-to-provide-information claim to present value. cab failed to object to the lack of the
instruction at trial, thus we review only for plain error. See Preferred RX v. Am. Prescription Plan,
46 F.3d 535, 548 (6th Cir. 1995); Fed. R. Civ. P. 51(d)(2).
“Under the common law of Ohio, future damages must be reduced to present value, and a
defendant is entitled to a jury instruction to that effect.” Galayda v. Lake Hosp. Sys., 644 N.E.2d
298, 301 (Ohio 1994). But, as we discuss above, the damages on the failure-to-provide-information
claim represent “the value of the information cab was required to turn over to Tharo” on the date of
the breach, and at trial cab failed to challenge the accuracy of i1.7 million estimate. Nevertheless,
cab asks this court to speculate that Brlas’s estimate did not reflect the value at the time of the
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No. 05-3876
Tharo Sys. v. cab Produkttechnik
breach and to conclude that the trial court plainly erred by not instructing the jury to reduce its
damages award accordingly. We decline to engage in such speculation.5
F. Parol Evidence
Post-trial, the magistrate judge denied cab’s Fed. R. Civ. P. 50(b) for judgment as a matter
of law on the failure-to-provide-information claim. On appeal, cab argues that the LOU’s
unambiguous terms mandated judgment as a matter of law in its favor, and the trial court improperly
allowed parol evidence. Assuming the trial court erroneously admitted the disputed evidence, we
nonetheless affirm the trial court’s denial of cab’s 50(b) motion because cab failed to renew its
motion for judgment as a matter of law at the close of all evidence.
“‘It is well-settled that a court can . . . consider a [post-trial] motion for a [judgment as a
matter of law] only if the moving party has previously made a motion for [judgment as a matter of
law] at the close of all the evidence.” United States ex rel. A+ Homecare, Inc. v. Medshares Mgmt.
Group, Inc., 400 F.3d 428, 447-48 (6th Cir. 2005) (quoting Portage II v. Bryant Petroleum Corp.,
899 F.2d 1514, 1522 (6th Cir. 1990) (footnote omitted). cab moved for judgment as a matter of law
at the conclusion of the Tharo’s case but failed to renew its motion at the close of all evidence.
Although “technical deviation from [this procedural] command is not fatal,” Medshares Mgmt., 400
5
In the order denying cab’s post-judgment motions, the magistrate judge noted that “[i]f
Tharo chooses to go forward with a new trial [on damages], Tharo must come forward with evidence
of present value.” This does not, however, affect our analysis. If Tharo had been required at trial
to come forward with “evidence of present value,” presumably it would have explained, as it does
now, that the evidence presented at trial already estimated the present value of the breach.
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No. 05-3876
Tharo Sys. v. cab Produkttechnik
F.3d at 448 (quotation omitted), cab makes no argument that an exception applies. See id. (listing
exceptions to the rule). We affirm the denial of the motion.6
III.
For these reasons, the court remands the case to allow the magistrate judge to determine the
date prejudgment interest stopped accruing on the overcharge claim. Accordingly, the court also
remands the case to properly recalculate the amount of prejudgment interest Tharo is entitled to on
the overcharge claim. We affirm the trial court in all other respects.
6
Though the magistrate judge denied cab’s motion on the merits, we may affirm that decision
“if correct for any reason, including one not considered below.” Hoge v. Honda of Am. Mfg., 384
F.3d 238 (6th Cir. 2004) (quotation omitted).
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