Children's v. Walt Disney Co. , 357 F.3d 860 ( 2004 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
Nos. 02-3161/3310
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Children’s Broadcasting Corporation, *
a Minnesota corporation, *
*
Appellee/Cross-Appellant, *
* Appeals from the United States
v. * District Court for the
* District of Minnesota.
The Walt Disney Company, a *
Delaware corporation; ABC Radio *
Networks, Inc., a Delaware corporation, *
*
Appellants/Cross-Appellees. *
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Submitted: June 12, 2003
Filed: January 26, 2004
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Before LOKEN, Chief Judge, HEANEY and RILEY, Circuit Judges.
___________
RILEY, Circuit Judge.
Children’s Broadcasting Company (Children’s) sued ABC Radio Networks,
Inc. (ABC Radio) and The Walt Disney Company (Disney) for breach of contractual
duties to sell advertising and to maintain confidentiality and for misappropriation of
a trade secret. The case was tried to a jury, which awarded Children’s $1.5 million
for breach of contract, and $8 million for breach of the contractual duty of
confidentiality and misappropriation of the trade secret. ABC Radio and Disney
appeal (1) the district court’s1 denial of their motion for judgment as a matter of law
or, alternatively, for new trial; and (2) the award of prejudgment interest to
Children’s. Children’s cross appeals, claiming the district court erred (1) in
narrowing the scope of Children’s confidentiality claim solely to the misappropriated
trade secret; and (2) by not awarding Children’s exemplary damages and attorney
fees. We affirm.
I. BACKGROUND
This case, involving a letter agreement between Children’s and ABC Radio
(ABC Radio was later acquired by Disney), is before our court for a second time. In
the previous appeal, our court held the district court erred in granting judgment as a
matter of law in favor of ABC Radio and Disney on the issue of causation.
Children’s Broad. Corp. v. The Walt Disney Co., 245 F.3d 1008, 1013, 1016 (8th Cir.
2001). We determined the evidence was sufficient to support the jury’s finding that
the breach of contract and the misappropriation of an advertiser list caused harm to
Children’s. Id. at 1016. We also ruled evidence was presented from which the jury
could approximate Children’s damages. Id. at 1017. We affirmed the district court’s
conditional grant of a new trial, because the district court did not abuse its discretion
in finding the testimony of one of Children’s experts should have been excluded. Id.
at 1018-19. We remanded the case for a new trial on the limited issue of damages.
Id. at 1022.
Our previous decision thoroughly discusses the underlying facts of this case,
and we refer our reader to that decision for the details. Hereafter, we discuss only the
facts most pertinent to this second appeal.
1
The Honorable Ann D. Montgomery, United States District Judge for the
District of Minnesota.
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At the retrial on damages, Children’s presented evidence ABC Radio and
Disney had “accelerated” their entry into the children’s radio market by using
information about advertising and marketing they obtained from Children’s and its
children’s radio network, Radio AAHS. The jury awarded Children’s (1) $1.5 million
on the breach of contract claim for ABC Radio’s failure to make reasonable efforts
to sell advertising and to develop affiliates for Children’s radio network, i.e., Radio
AAHS; and (2) $8 million for breach of the contractual duty of confidentiality and the
misappropriation of information about Children’s advertisers and potential advertisers
contained in a document identified as PX217. The district court denied ABC Radio’s
and Disney’s motion for judgment as a matter of law on the $8 million award or,
alternatively, for a new trial. Children’s moved for entry of judgment to include
prejudgment interest and exemplary damages. The district court awarded Children’s
prejudgment interest totaling $2,567,082.19, and denied Children’s request for
exemplary damages and attorney fees. The district court entered a $9.5 million
judgment for Children’s with $2,567,082.19 in interest.
II. DISCUSSION
A. Judgment as a Matter of Law
1. Standard of Review
ABC Radio and Disney argue the district court erred in denying their post-trial
motion for judgment as a matter of law. “We review de novo the district court’s
denial of [a] post-verdict motion for judgment as a matter of law.” Racicky v.
Farmland Indus., Inc., 328 F.3d 389, 393 (8th Cir. 2003). We are required to decide
whether or not the record contains evidence sufficient to support the jury’s verdict.
Id. In doing so, “we must examine the sufficiency of the evidence in the light most
favorable to [Children’s] and view all inferences in [its] favor.” Id. (citation omitted).
“Judgment as a matter of law is appropriate only when all of the evidence points one
way and is susceptible of no reasonable inference sustaining [Children’s] position.”
Id. (citation omitted).
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2. Evidence Supporting Verdict
ABC Radio and Disney argue the evidence Children’s presented regarding
damages due to misappropriation of PX217 does not support the verdict. ABC Radio
and Disney contend (1) the theories of Dr. Jonathan Putnam (Dr. Putnam), the
damages expert witness for Children’s, were unfounded and speculative; (2) Dr.
Putnam considered evidence outside PX217 in reaching his conclusions; and (3) Dr.
Putnam could not identify the proper “acceleration” intervals of ABC Radio’s and
Disney’s entry into the market. ABC Radio and Disney contend they provided the
only competent evidence regarding any acceleration interval. ABC Radio and Disney
argue Children’s damages were improperly based upon projected profits rather than
actual results. Finally, ABC Radio and Disney assert Children’s did not show
evidence of any actual use of PX217.
a. Dr. Putnam’s Testimony
“We review under an abuse of discretion standard a district court’s ruling
admitting expert witness testimony under Rule 702.” Bonner v. ISP Techs., Inc., 259
F.3d 924, 928 (8th Cir. 2001). “Where the district court errs in admitting evidence,
we will only grant a new trial or set aside a verdict if there is a clear and prejudicial
abuse of discretion.” Lovett ex rel. Lovett v. Union Pac. R.R. Co., 201 F.3d 1074,
1080 (8th Cir. 2000).
Dr. Putnam offered a theory regarding ABC Radio’s and Disney’s accelerated
entry into children’s radio. The jury could have used all or some or none of Dr.
Putnam’s various acceleration intervals (eleven months to two years) as benchmarks
to calculate the appropriate amount of damages, depending on the jury’s findings
regarding the amount of acceleration resulting from ABC Radio’s and Disney’s
conduct. In calculating the various intervals, Dr. Putnam considered evidence,
including two ABC Radio documents, regarding the length of time it would take to
launch a children’s radio network. Dr. Putnam accepted Children’s testimony that
Children’s took about 3 years to acquire the information in PX217. Dr. Putnam relied
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on documents from ABC Radio and Disney saying the research and development
Children’s had done, though not specifically referring to the information in PX217,
would avoid ABC “pumping $30 to $40 million into this business and taking 2 or 3
years of sizable start-up losses.” One of the same documents also noted Children’s
had “built a brand and an asset in this area” and it would take ABC Radio a while to
build up such research and development on its own.
Dr. Putnam provided dollar amounts to the jury of the increased value of ABC
Radio and Disney based on three acceleration intervals–eleven months, twelve
months, and twenty-four months–to which Dr. Putnam assigned the values of $35
million, $37 million, and $54 million. Although Dr. Putnam did not testify as to the
exact length of the acceleration interval, he did state the length of the acceleration
interval would be determined by the time needed to recreate the information. As to
the time for recreating the information, Jane Steinberg, Vice President of Syndicated
Programming and Internet Sales for ABC Radio, testified she could recreate the
information on PX217 in less than a week, but Children’s Marketing Manager, Rick
Smith, testified it took four years to develop Radio AAHS and having the information
would save a competitor a significant amount of time. An ABC Radio senior
management review in January 1996 estimated ABC could “get to the same stage of
development, in a reasonably short period of time (6-18 months).”
The district court stated it was satisfied with Dr. Putnam’s credentials for
valuing trade secrets, and Dr. Putnam used an accepted academic methodology. The
court found Dr. Putnam’s testimony relevant and reliable under Kumho Tire Co. v.
Carmichael, 526 U.S. 137, 141-42 (1999). The court concluded ABC Radio’s and
Disney’s objections to Dr. Putnam’s opinion were better directed to the weight of the
testimony rather than admissibility. Finally, the district court found the defendants
had a full opportunity to cross-examine Dr. Putnam and could have presented expert
testimony to rebut Dr. Putnam’s assertions.
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In the prior appeal, our court upheld the causation finding based partly upon
an expert’s opinion that “ABC Radio and Disney were able to accelerate their entry
into the market by using information, particularly information about advertising and
marketing, they obtained from Children’s.” Children’s, 245 F.3d at 1016. “As a
general rule, the factual basis of an expert opinion goes to the credibility of the
testimony, not the admissibility, and it is up to the opposing party to examine the
factual basis for the opinion in cross-examination. Only if the expert’s opinion is so
fundamentally unsupported that it can offer no assistance to the jury must such
testimony be excluded.” Bonner, 259 F.3d at 929-30 (quoting Hose v. Chicago N.W.
Transp. Co., 70 F.3d 968, 974 (8th Cir. 1996)). ABC Radio and Disney failed to
show Dr. Putnam’s opinion was so unsupported that his testimony could offer no
assistance to the jury. We find the district court did not abuse its discretion in
admitting Dr. Putnam’s testimony.
b. Other Evidence
“Under Minnesota law, damages for breach of contract must be proved to a
reasonable certainty, and a party cannot recover speculative, remote, or conjectural
damages.” Children’s, 245 F.3d at 1016 (citing Leoni v. Bemis Co., 255 N.W.2d 824,
826 (Minn. 1977)). Instead, “[o]nce the fact of loss has been shown, the difficulty of
proving its amount will not preclude recovery so long as there is proof of a reasonable
basis upon which to approximate the amount.” Id. (quoting Leoni, 255 N.W.2d at
826). Further, “[d]amages for misappropriation of a trade secret ‘can include both the
actual loss caused by the misappropriation and the unjust enrichment caused by
misappropriation that is not taken into account in computing actual loss.’” Id.
(quoting Minn. Stat. § 325C.03(a)). “The jury’s award does not have to match any
particular figure in the evidence as long as the award ‘is within the mathematical
limitations established by the various witnesses and is otherwise reasonably
supported by the evidence as a whole.’” Id. at 1017 (quoting Carroll v. Pratt, 76
N.W.2d 693, 697 (Minn. 1956)).
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Smith testified Children’s took four years to develop Radio AAHS, and the
information in PX217 would save a competitor a “significant amount of time” in
entering the children’s radio market. Children’s Chief Operating Officer, James
Gilbertson, said the information contained in PX217 was not available to competitors
and would be useful to competitors. For example, PX217 disclosed Children’s rates
and what advertising particular clients were buying.
Children’s also presented documents from ABC Radio showing the importance
of moving quickly to launch Radio Disney, including a document entitled
“Competitive Response to Radio AAHS,” demonstrating ABC Radio and Disney
knew the value of quick entry into the children’s radio market. Another letter from
ABC Radio’s Scott McCarthy to Lynn Kesterson-Townes, Disney’s Director of
Strategic Planning and Development, also cites the importance of moving quickly,
stating: “For competitive reasons, I think it is essential to complete these steps and
make a decision on this business segment within the next 45-60 days,” and noting
further “there is probably only room for one radio network focused on kids’ radio.”
After Radio Disney was implemented, James Pastor, Vice President of Sales and
Marketing for Radio Disney, testified Radio Disney had been successful. Children’s
introduced a letter from Disney President Michael Eisner to shareholders reporting,
“[b]y any measure, Radio Disney is a success.” Another Radio Disney document
projected advertising revenue in 1998 at approximately $8 million.
Evidence was presented that ABC Radio and Disney accelerated their entry
into the market by using information contained in PX217. Gilbertson testified ABC
Radio specifically requested the information contained in PX217. ABC Radio’s Bob
Callahan explained in an e-mail memorandum to ABC Radio’s Jim Arcara that, if
ABC Radio entered the kids’ radio market with Disney, ABC could use the agreement
with Children’s “as paid education [and] exploit [Children’s] affiliate base.” ABC’s
Executive Vice President, Bart Catalane, noted in a fax to ABC’s David Kantor that
the agreement with Children’s could be used as “‘[p]aid tuition’ – ABC gets paid to
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learn the business from the inside with zero risk” and could allow ABC to “take
control of how we enter or [Children’s] exits the market.” Finally, in an April 24,
1996 Disney business plan draft or “deck” planning Radio Disney, Disney noted (1)
“Because there is advertising ‘room’ for only one 24 hour children’s radio format in
a market, Radio Disney will have to overcome Radio AAHS’ lead in 26 markets,
representing roughly 34% of U.S. households,” and (2) “Radio Disney network spots
will be priced aggressively versus [Radio] AAHS (Radio Disney’s spot rates are not
projected to reach Radio AAHS’ current spot rates until 1999.)” PX217 information
actually showed up in this Disney April 24, 1996 “deck.” See Surgidev Corp. v. Eye
Tech., Inc., 828 F.2d 452, 456 (8th Cir. 1987) (recognizing the Minnesota law
inference: “[t]he fact that defendants have exhibited an intention to use this
information . . . is circumstantial proof of its value.”) (alteration in original); see also
Shelden v. Barre Belt Granite Employer Union Pension Fund, 25 F.3d 74, 79 (2d Cir.
1994) (declaring “[i]t is well settled that the existence of a plan to do a given act is
relevant to show that thereafter the act was in fact done”).
3. Sufficiency of Evidence
Disney’s and ABC Radio’s arguments regarding the sufficiency of the evidence
largely focus on the testimony of Dr. Putnam. That the jury did not return a verdict
precisely equivalent to the amounts provided by Dr. Putnam’s testimony is
immaterial. See Sch. Dist. No. 11 v. Sverdrup & Parcel and Assoc., 797 F.2d 651,
654 (8th Cir. 1986).2 As we stated in the previous appeal, “[t]he jury was entitled to
sort through the evidence presented at trial and to arrive at what it considered to be
the damages caused by the conduct it found to be wrongful. In short, there was
evidence from which the jury could approximate the amount of damages sustained by
Children’s.” Children’s, 245 F.3d at 1017. At the second trial, the jury sorted
through the evidence and arrived at a figure “within the parameters established by the
2
Hubert H. Humphrey said, “The right to be heard does not automatically
include the right to be taken seriously.”
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evidence.” Id. (quoting Fudally v. Ching Johnson Builders, Inc., 360 N.W.2d 436,
439 (Minn. Ct. App. 1985)). The district court did not err in denying the motion for
judgment as a matter of law.
B. New Trial
1. Standard of Review
ABC Radio and Disney contend the district court erred in denying their motion
for a new trial, claiming (1) the verdict was against the weight of the evidence, (2) the
district court erred in permitting Dr. Putnam to testify, and (3) the district court erred
in refusing to give certain jury instructions. “The denial of motion for a new trial
under Fed. R. Civ. P. 59(a) is reviewed with great deference to the district court’s
ruling and will not be reversed in the absence of a clear abuse of discretion.” Belk
v. City of Eldon, 228 F.3d 872, 878 (8th Cir. 2000). “When the basis of the motion
for a new trial is that the jury’s verdict is against the weight of the evidence, the
district court’s denial of the motion is virtually unassailable on appeal.” Jones v.
Swanson, 341 F.3d 723, 732 (8th Cir. 2003) (internal quotations omitted).
2. Evidence Presented
a. Weight of Evidence and Dr. Putnam’s Testimony
We have already addressed ABC Radio’s and Disney’s contentions the jury’s
verdict was against the greater weight of the evidence and the district court erred in
allowing Dr. Putnam to testify. “After a thorough review of the record, we are
persuaded that [ABC Radio and Disney] failed to make the strong showing of abuse
of discretion that is required.” Barnes v. Parker, 972 F.2d 978, 980 (8th Cir. 1992).
Children’s presented ample evidence to support the jury’s verdict. Dr. Putnam was
qualified to testify as an expert on Children’s trade secret damages, and the
defendants had an opportunity to cross-examine him, present evidence to rebut his
testimony, and argue in summation all of the inadequacies of Dr. Putnam’s
qualifications, credibility, methodology, and opinions. Even assuming the district
court erroneously admitted certain evidence, the evidence was not so prejudicial that
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a new trial would necessarily produce a different result. See Wheeler v. Mo. Hwy.
& Transp. Comm’n, 348 F.3d 744, 749 (8th Cir. 2003). We conclude the district
court did not abuse its discretion in finding substantial evidence supported the jury’s
award.
b. Jury Instructions
Next, ABC Radio and Disney argue the district court erred in declining to
include several jury instructions related to the materiality of the breach, the lack of
fiduciary duties, the absence of fraud, and the purpose of the contract. ABC Radio
and Disney requested these instructions because, as they contend, these instructions
were the established law of the case. “The standard for reviewing alleged errors in
jury instructions is whether the instructions, taken as a whole and viewed in light of
the evidence and applicable law, fairly and adequately submitted the issues in the case
to the jury.” Jones, 341 F.3d at 734. “The form and language of jury instructions are
committed to the sound discretion of the district court so long as the jury is correctly
instructed on the substantive issues in the case.” Id. “This court will reverse on the
basis of instructional error only if it finds the error affected the substantial rights of
the parties.” Id.
Instruction Number 13 informed the jury of the first jury’s findings and limited
the scope of the second jury’s role to determining the amount of Children’s damages.3
3
Instruction Number 13 stated:
As you know, this case has already been tried once, and many of
the issues have already been decided. I told you at the beginning of the
trial what the first jury found, and as I explained to you then, those
findings are still valid. Those findings were as follows:
First, the jury found that ABC breached the November 17, 1995
contract by failing to “use reasonable efforts to sell commercial spots for
the [Radio AAHS] format in the same manner as sales are conducted for
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Instruction Number 14 cautioned the jury:
The November 17, 1995, contract between Children’s and ABC
did not restrict ABC and Disney’s right to compete against Children’s.
The establishment of Radio Disney cannot be considered wrongful
conduct.
ABC did not breach any other provision of the contract with
Children’s other than the duty to use reasonable efforts to sell
advertising and the duty of confidentiality with respect to Plaintiff’s
Exhibit # 217. Any other claims for breach of contract or other
wrongdoing were rejected by the first jury.
During the course of the trial, the district court gave curative instructions and
reminded the jury the issue before it was damages, not the issues of liability, fault, or
sale of ABC’s commercial inventory for its programs.”
Second, the jury found that ABC breached the provision of the
November 17, 1995 contract which required ABC to keep Plaintiff’s
Exhibit # 217 “confidential and . . . [to] use such information only for
the purposes contemplated by [the contract].”
Third, the jury found that ABC and Disney misappropriated
Children’s trade secret, Plaintiff’s Exhibit # 217.
Fourth, the jury found that these breaches and misappropriation
directly caused harm to Children’s.
For purposes of this trial, the first jury’s findings are settled and
conclusive, and you are not to second-guess those findings. Your role
is to determine the amount of damages to which Children’s is entitled as
compensation.
(alternations in original).
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causation. The court also instructed the jury to disregard any allegations of other
types of wrongful conduct outside the claims of misappropriation, breach of contract,
and the duty to maintain confidentiality.4
The district court concluded the materiality of the breach was irrelevant in the
retrial, negating the need for an instruction on that issue. The district court also ruled
the issues of the absence of a special relationship between the parties, the lack of
fiduciary duties, the absence of fraud, and the purpose of the contract were irrelevant
in the retrial. The district court noted it attempted to define narrowly the issues for
the second jury through the curative instructions. What was relevant was what
damages proximately resulted from the two principal wrongs found by the first jury.
Taken as a whole, the jury instructions “fairly and adequately submitted the issues . . .
to the jury.” Id. ABC Radio and Disney have not shown how the failure to give their
proposed instructions affected ABC Radio’s and Disney’s substantial rights. Any
error that may have occurred in instructing the jury was cured by the district court’s
curative instructions. We find no error in the instructions provided the jury, and the
district court did not abuse its discretion in refusing to give the proposed instructions
or by denying the motion for a new trial.
C. Prejudgment Interest
ABC Radio and Disney appeal the district court’s award of prejudgment
interest. ABC Radio and Disney claim (1) Children’s was awarded future damages,
and (2) the amount of damages was not liquidated and readily ascertainable. “We
review the district court’s ruling on prejudgment interest for an abuse of discretion.”
R & B Appliance Parts, Inc. v. Amana Co., 258 F.3d 783, 787 (8th Cir. 2001).
However, the question of “[w]hether the district court had authority to grant
4
The district court cautioned the jury during the trial stating, “any other
allegations that might have been made about any other type of wrongful conduct or
anything else that had been mentioned are not for your consideration and may not be
used by you to assess damages against the defendant.”
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prejudgment interest is a question of state law which we review de novo.” Transit
Cas. Co. v. Selective Ins. Co. of the S.E., 137 F.3d 540, 546 (8th Cir. 1998). Because
this is a diversity action, Minnesota law controls the award of prejudgment interest.
See Berglund v. State Farm Mut. Auto. Ins. Co., 121 F.3d 1225, 1230 (8th Cir. 1997).
Minnesota law provides:
Except as otherwise provided by contract or allowed by law, preverdict,
preaward, or prereport interest on pecuniary damages shall be computed
. . . from the time of the commencement of the action or a demand for
arbitration, or the time of a written notice of claim, whichever occurs
first, except as provided herein.
Minn. Stat. Ann. § 549.09(1)(b) (West Supp. 2004). One limiting exception to this
general rule is that prejudgment interest is not available on “judgments or awards for
future damages.” Id. § 549.09(1)(b)(2).
1. Future Damages
Instruction Number 16 expressly stated, “damages for breach of the contract
must be limited to those suffered on or before October 24, 1996.” The discounted
cash flow model Dr. Putnam presented allowed the jury to calculate the net current
value of damages rather than damages likely to occur in the future. Dr. Putnam used
the discounted cash flow method to determine the extent to which ABC Radio and
Disney had been unjustly enriched. Dr. Putnam projected two revenue streams. One
revenue stream was the future cash flows Radio Disney would have received if it had
not misappropriated Radio AAHS’s materials or breached the confidentiality
agreement. The second revenue stream was Radio Disney’s future cash flows with
the benefit of the material Radio Disney misappropriated and used in violation of the
confidentiality agreement. Dr. Putnam discounted both revenue streams to arrive at
Radio Disney’s present value had ABC Radio and Disney not misappropriated or
breached the confidentiality agreement as well as Radio Disney’s value due to its
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misappropriation and breach of the confidentiality agreement. The difference
between the two values allegedly constitutes the amount ABC Radio and Disney were
unjustly enriched.
Future damages mean damages for future loss. In this case, the jury was
properly instructed, and Dr. Putnam used future earnings to determine the current (as
of October 24, 1996) value of the loss caused by the wrongful acts of ABC Radio and
Disney. Therefore, the district court properly granted prejudgment interest on the
value of the present loss.
2. Readily Ascertainable
ABC Radio and Disney also claim the district court erred in awarding
prejudgment interest, because the damages awarded Children’s were not liquidated
or readily ascertainable. In interpreting section 549.09, this court previously
explained the status of Minnesota law: “Prior to 1984, prejudgment interest was
allowed on an unliquidated claim only where the damages were readily ascertainable
by computation or reference to generally recognized standards such as market value.”
Simeone v. First Bank Nat’l Ass’n, 73 F.3d 184, 191 (8th Cir. 1996). We then noted,
“In 1984, however, § 549.09 was amended to provide that ‘[t]he prevailing party shall
receive interest on any judgment or award.’” Id. (quoting Minn. Stat. Ann. § 549.09)
(alternations in original). We concluded, “The amended statute allows prejudgment
interest ‘irrespective of a defendant’s ability to ascertain the amount of damages for
which he might be held liable.’” Id. (quoting Lienhard v. State, 431 N.W.2d 861, 865
(Minn. 1988)).
ABC Radio and Disney contend the Lienhard ruling was dicta. However, the
Minnesota Court of Appeals has squarely rejected this argument:
Lienhard thus considered and decided the question of the continued
applicability of the ascertainability rule in a context where the issue was
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necessary to the holding in the case. Because the supreme court has
held that preverdict interest is available “irrespective of a defendant’s
ability to ascertain the amount of damages,” we conclude that
post-Lienhard cases that apply the ascertainability rule . . . are incorrect.
Myers v. Hearth Tech., Inc., 621 N.W.2d 787, 794 (Minn. Ct. App. 2001) (quoting
Lienhard, 431 N.W.2d at 865) (citations omitted). We conclude the district court did
not err in awarding prejudgment interest to Children’s.
D. Exemplary Damages and Attorney Fees
Children’s asserts the district court erred in refusing to award Children’s
exemplary damages and attorney fees. We review the district court’s decision not to
award exemplary damages for abuse of discretion. See Rupp v. Omaha Indian Tribe,
45 F.3d 1241, 1246 (8th Cir. 1995). We also review the district court’s denial of
attorney fees for abuse of discretion. Allied Sys. Ltd. v. Teamsters Auto. Transp.
Chauffeurs, 304 F.3d 785, 792 (8th Cir. 2002).
The Minnesota Trade Secrets Act allows a court to award exemplary damages
in an amount up to double the actual damages “[i]f willful and malicious
misappropriation exists.” Minn. Stat. Ann. § 325C.03(b). Also, if “willful and
malicious misappropriation exists, the court may award reasonable attorney’s fees to
the prevailing party.” Minn. Stat. Ann. § 325C.04(iii). As the district court realized,
“there was not a finding of ‘willful and malicious’ conduct by the first jury. The
remand from the Eighth Circuit was for a ‘new trial limited to damages.’” The district
court correctly found the “issue of whether Defendants’ conduct rose to the level of
‘willfulness and maliciousness’ is a liability question and beyond the scope of the
limited remand.” Based upon our review of the record in this case, we find no error
and no abuse of discretion in the district court’s denial of exemplary damages or
denial of attorney fees for willful and malicious conduct.
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E. Scope of Trial on Remand
Children’s also claims the district court erred in narrowing the scope of
Children’s breach of confidentiality claims by only permitting Children’s to introduce
evidence regarding damages for misuse of PX217. Children’s explains it “does not
request yet another remand of this case for another damages trial solely to address this
error.” Instead, Children’s states, “if the Court were to remand the case in light of
Defendants’ meritless arguments, any such remand should allow Children’s to
recover the full amount of damages for Defendants’ breaches of their confidentiality
obligation under the contract as determined in the liability trial.” Because our court
will not remand the matter for a new trial on damages, as Children’s concedes, this
issue is moot.
III. CONCLUSION
We affirm in all respects.
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