Innovative Technologies Corp. v. Advanced Mgt. Technology, Inc. , 2011 Ohio 5544 ( 2011 )

[Cite as Innovative Technologies Corp. v. Advanced Mgt. Technology, Inc., 2011-Ohio-5544.]
IN THE COURT OF APPEALS FOR MONTGOMERY COUNTY, OHIO
INNOVATIVE TECHNOLOGIES :
CORPORATION
Plaintiff-Appellee/ : C.A. CASE NO. 23819
Cross-Appellant
v. : T.C. NO. 2003CV3674
ADVANCED MANAGEMENT : (Civil appeal from
TECHNOLOGY, INC. Common Pleas Court)
:
Defendant-Appellant/
Cross-Appellee :
:
..........
OPINION
Rendered on the 28th day of October , 2011.
..........
JAMES A. DYER, Atty. Reg. No. 0006824 and MICHAEL P. MOLONEY, Atty. Reg.
No. 0014668 and HEATHER DUFFEY WELBAUM, Atty. Reg. No. 0071019 and
CATHARINE D. KIDD, Atty. Reg. No. 0085427, 1900 Kettering Tower, 40 N. Main
Street, Dayton, Ohio 45423
Attorneys for Plaintiff-Appellee/Cross-Appellant Innovative Technologies
Corporation
BRAD S. SULLIVAN, Atty. Reg. No. 0040219, Chemed Center, Suite 1900, 255
East Fifth Street, Cincinnati, Ohio 45202
and
DAVID C. GREER, Atty. Reg. No. 0009090, 400 National City Center, 6 N. Main
Street, Dayton, Ohio 45402
Attorneys for Defendant-Appellant/Cross-Appellee Advanced Management
Technology, Inc.
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..........
DONOVAN, J.
{¶ 1} Defendant-appellant/cross-appellee Advanced Management
Technology, Inc. (hereinafter “AMTI”) appeal multiple judgments of the Montgomery
County Court of Common Pleas, General Division, overruling two motions for
summary judgment, a motion for judgment notwithstanding the verdict (“JNOV”),
and a motion for a new trial rendered in the civil suit brought against them by
plaintiff-appellee/cross-appellant Innovative Technologies Corporation (hereinafter
“ITC”). AMTI also appeals the trial court’s decision that conditionally granted its
motion for remittitur of both the compensatory and punitive damages awarded by
the jury. Lastly, AMTI appeals the trial court’s decision granting attorney’s fees to
ITC.
{¶ 2} In its cross-appeal, ITC argues that the trial court erred when it
conditionally granted AMTI’s motion for remittitur which reduced the compensatory
damages award from $5,752,894.00 to $1,970,599.44, and the punitive damages
award from $17,000,000.00 to $5,832,974.34.
{¶ 3} AMTI filed a timely notice of appeal with this Court on January 5, 2010.
ITC filed a timely notice of cross-appeal on January 15, 2010.
I
{¶ 4} Plaintiff-appellee/ cross-appellant ITC is an Ohio-based government
contractor that provides onsite administrative, operational, and consulting services
primarily for the Department of the Air Force located at Wright Patterson Air Force
Base (hereinafter “WPAFB”). From May of 1995 until August 31, 2001, ITC was
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under contract to provide support services to the Mobility Systems Program Office
(hereinafter “Mobility SPO”) at WPAFB. The Mobility SPO contract required ITC to
provide twenty-two civilian employees to work at WPAFB. The Mobility SPO
contract was initially scheduled to be renewed in May of 2001.
{¶ 5} Defendants James Silcott, Sheila Silcott, and David Nicholas
(hereinafter collectively referred to as “the individual defendants”) were employees
of ITC assigned to work on the Mobility SPO contract at WPAFB. James Silcott
was ITC’s on-site task manager for the Mobility SPO, and was described as ITC’s
“eyes and ears” for the project at WPAFB.
{¶ 6} At the beginning of their employment, the individual defendants were
required by ITC to sign two documents, “An Agreement Covering Confidentiality,
Conflict of Interest, Noncompetition, Proprietary Rights, and Related Matters,” and
a “Full-Time At-Will Employment Agreement.” Viewed together, the agreements
required employees to maintain the confidentiality ITC’s trade secrets and
proprietary information and relinquish said information upon termination of their
employment. The agreements also restricted employees of ITC from soliciting
business from ITC’s current client base or any potential clients who were being
actively courted for business purposes for a period of six months after termination.
The agreements prohibited employees from engaging in business activities which
competed with ITC, as well as requiring the written consent of ITC in order to hire
away any ITC employees. Lastly, the agreements prohibited employees from
accepting employment from another contractor competing for work currently being
performed by the employee for ITC.
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{¶ 7} The individual defendants formed defendant business entity Kenton
Trace Technologies, L.L.C. (hereinafter “KTT”) on April 3, 2000, while they were still
employed by ITC. Since KTT had no work history and no employees other than
the three individual defendants, the newly formed company was ineligible to enter a
bid for the Mobility SPO contract. In order to gain the necessary credentials,
James Silcott secretly approached representatives from
defendant-appellant/cross-appellee AMTI, a large, publicly held, government
contracting firm based in Washington, D.C. AMTI immediately expressed interest
in Silcott’s proposal as it had been attempting, albeit unsuccessfully, to win
government contracts at WPAFB.
{¶ 8} In September of 2000, KTT and AMTI entered into a “teaming
agreement” in order to submit a bid against ITC for the Mobility SPO contract.
James Silcott promised that he could persuade the incumbent employees currently
working for ITC to leave and come work for KTT. In return, AMTI promised that it
would employ KTT as its subcontractor once it received the Mobility SPO contract.
Both AMTI and KTT believed their plan would be successful because the Air Force
would be able to retain the incumbent work force for the Mobility SPO contract.
KTT and AMTI utilized ITC’s proprietary salary information and incumbent
employee information in order to prepare a bid for the contract.
{¶ 9} On January 30, 2001, KTT was granted a General Services
Administration (hereinafter “GSA”) schedule which permitted it to bid on various
government contracts at WPAFB, including the Mobility SPO contract held by ITC.
In March of 2001, AMTI helped KTT acquire the necessary security clearance for
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employment at WPAFB. On April 26, 2001, Silcott informed AMTI that KTT
intended to submit a bid for the Mobility SPO contract and that KTT looked forward
to working with AMTI in the future. On May 3, 2001, the individual defendants
resigned from their employment at ITC. On May 4, 2001, the GSA formally
announced that ITC, KTT, AMTI, and H.J. Ford would receive a Request for
Proposal (hereinafter “RFP”) for the renewal of the Mobility SPO contract. An RFP
is a mechanism which provides a contractor with permission to submit a bid on a
government contract set for renewal. Although AMTI and H.J. Ford received RFPs
for the Mobility SPO contract, both companies abstained from bidding and did not
submit proposals. As part of its bid proposal, KTT attached employee resume
authorization forms from several ITC employees who were already working for ITC
on the Mobility SPO contract.
{¶ 10} Upon becoming aware of the actions taken by KTT, ITC filed a
complaint (2001 CV 2521) against KTT, as well as a motion for a temporary
restraining order and preliminary injunction in order to enjoin KTT from competing
for the Mobility SPO contract. Following hearings held on May 30, 2001, and June
4, 2001, the trial court issued a written decision on June 21, 2001, in which it held
that ITC’s employment agreements signed by the individual defendants were
enforceable and that the Silcotts and Nicholas had breached them. Specifically,
the trial court held that the individual defendants, while employed by ITC and for six
months after their employment had been terminated, could not compete with ITC
for a service that ITC was providing or had a contract to provide. Additionally, the
court held that once ITC’s Mobility SPO contract with WPAFB expired, the
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employment agreements no longer operated to prevent the individual defendants or
other incumbent employees from going to work for a new contractor while
performing the same job. Thus, KTT was denied permission to bid on the Mobility
SPO contract, and ITC received an extension on its contract with the Air Force until
August 31, 2001.
{¶ 11} In light of the events surrounding the May 2001 bid, officials at
WPAFB decided to issue a second RFP in August of 2001. Since KTT was
enjoined from submitting a bid for the August 2001 RFP, AMTI again offered to hire
the company as a subcontractor if KTT promised to provide the incumbent
employees from ITC, and KTT agreed. AMTI met with the ITC incumbent
employees and obtained their pledge to work for the KTT/AMTI team as early as
July of 2001. In August of 2001 AMTI, along with four other contractors (including
ITC), submitted bids for the Mobility SPO contract. Testimony adduced at the trial
established that AMTI utilized privileged and confidential proprietary information
provided by the individual defendants, as well as other incumbent employees from
ITC, in formulating its proposal for the Mobility SPO contract.
{¶ 12} AMTI submitted its bid to WPAFB on August 22, 2001. On August
29, 2001, the Air Force awarded the Mobility SPO contract to AMTI. Along with the
three individual defendants, nineteen former employees of ITC went to work for
AMTI after it won the Mobility SPO contract. Ultimately, AMTI was awarded the
Mobility SPO contract for three additional option years, maintaining it until May of
2005. During the entire four-year period in which it held the Mobility SPO contract,
AMTI utilized substantially the same group of incumbent employees who had
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previously worked for ITC.
{¶ 13} On April 30, 2003, ITC filed a notice of dismissal without prejudice
pursuant to Civ. R. 41(A) in Case No. 2001 CV 2521. Less than a month later, ITC
re-filed its complaint against KTT, the Silcotts and Nicholas, as well as adding AMTI
as a defendant in the litigation after learning of the defendants’ conspiracy. On
June 22, 2004, ITC filed a motion for partial summary judgment. KTT and the
individual defendants filed a joint motion to dismiss and motion in opposition to
ITC’s motion for partial summary judgment on July 26, 2004. On February 15,
2005, the trial court issued a decision overruling KTT’s joint motion to dismiss. In
the same decision, the trial court overruled in part and sustained in part ITC’s
motion for partial summary judgment. Specifically, the court held that as a matter
of law, the individual defendants violated their employment agreements with ITC
and were faithless servants. The trial court also held that it could not determine,
as a matter of law, whether KTT misappropriated trade secrets from ITC because
genuine issues existed regarding whether the information which ITC sought to
protect constituted trade secrets under Ohio law. Lastly, the court held that
genuine issues existed regarding ITC’s claim for tortious interference against all of
the defendants.
{¶ 14} On November 4, 2005, ITC filed an amended complaint against AMTI,
KTT, and the individual defendants in which it made the following claims: Count I,
breach of contract and enforcement of restrictive covenants against the individual
defendants; Count II, misappropriation of trade secrets against all defendants;
Count III, disgorgement of compensation by faithless servants against the individual
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defendants; Count IV, breach of contract for award of attorney’s fees against the
individual defendants; Count V, tortious interference with contracts and business
relationships against all defendants; Count VI, tortious interference with prospective
economic advantage against all defendants; Count VII, breach of fiduciary duty
against the individual defendants; Count VIII, civil conspiracy against AMTI; and
Count IX, unjust enrichment against AMTI.
{¶ 15} ITC filed a motion for partial summary judgment on its claims for
misappropriation and tortious interference with contracts against AMTI on April 4,
2006. AMTI filed a motion for summary judgment against ITC on the same day.
In its motion, AMTI argued that ITC cannot prove as a matter of law that AMTI
proximately caused ITC to lose the Mobility SPO contract. In a decision filed on
July 13, 2006, the trial court overruled both parties’ motions.
{¶ 16} On November 22, 2006, AMTI filed a motion for partial summary
judgment in which it again argued that ITC could not prove that the actions taken by
AMTI proximately caused ITC to lose the Mobility SPO contract. The trial court
overruled AMTI’s motion in a written decision filed on March 5, 2007. The court
found that genuine issues of material fact existed regarding whether ITC would
have retained the Mobility SPO contract “but for” the actions of AMTI.
{¶ 17} We note that shortly before the trial began in December of 2007, the
trial court issued a decision which limited ITC to introducing evidence of lost profits
from only the base year of the Mobility SPO contract. Thus, ITC was barred from
introducing evidence of lost profits from any of the three subsequent option years
since the trial court found such evidence to be speculative insofar as the Air Force
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had the sole discretion to either renew or decline to renew the Mobility SPO
contract with the winning bidder after the base year expired. We also note that the
compensatory damages portion of the trial was bifurcated from the punitive
damages portion.
{¶ 18} The compensatory damages portion of the jury trial began on
December 10, 2007. AMTI moved for a directed verdict both at the close of ITC’s
case, as well as at the close of all of the evidence. The trial court overruled both
motions for directed verdict. After a ten-day trial, the jury rendered a verdict finding
AMTI, KTT, and the individual defendants liable for ITC’s damages. The jury
subsequently awarded ITC $752,894.00 against AMTI for misappropriation of trade
secrets; $4,000,000.00 against AMTI for tortious interference with ITC’s contracts
with its employees; and $1,000,000.00 against AMTI for civil conspiracy for an
aggregate total of $5,752,894.00 in compensatory damages against AMTI. KTT
was found liable for $471,744.00 for misappropriation of trade secrets against ITC.
With respect to the individual defendants, the jury awarded ITC the wages and
benefits it had paid them while they were illegally conspiring with AMTI, to wit:
$128,161.40 to James Silcott; $32,928.66 to Sheila Silcott; and $90,127.38 to
David Nicholas. AMTI moved for judgment notwithstanding the verdict on
December 31, 2007, prior to the beginning of ITC’s case on punitive damages.
The trial court overruled AMTI’s motion for JNOV on January 3, 2008. After the
punitive damages portion of the trial, AMTI was found liable for $17,000,000.00 in
punitive damages. The jury also found AMTI liable for ITC’s attorney’s fees in this
litigation.
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{¶ 19} On February 4, 2008, AMTI filed a motion for JNOV, a motion for a
new trial, and an alternative motion for vacatur or remittitur of the compensatory
and punitive damages awards. In a thorough decision filed on July 10, 2008, the
trial court overruled AMTI’s motion for JNOV and motion for new trial. However,
the trial court granted AMTI’s motion for remittitur as to both the compensatory and
punitive damages awarded by the jury, which reduced the compensatory damages
award from $5,752,894.00 to $1,970,599.44, and the punitive damages award from
$17,000,000.00 to $5,832,974.34.
{¶ 20} A three-day hearing on attorney’s fees was held during late February
and early March of 2009. In a written decision filed on December 11, 2009, the
trial court awarded ITC $2,941,502.31 in attorney’s fees, but denied ITC’s motion
for prejudgment interest.
{¶ 21} The instant appeal of AMTI and cross-appeal of ITC are now properly
before us.
II
{¶ 22} Because they are interrelated, AMTI’s first, second, and third
assignments of error will be discussed together as follows:
{¶ 23} “THE TRIAL COURT ERRED IN DENYING AMTI’S MOTIONS FOR
SUMMARY JUDGMENT BECAUSE ITC FAILED TO DEMONSTRATE A GENUINE
ISSUE OF MATERIAL FACT THAT AMTI WAS THE PROXIMATE CAUSE OF ITC
NOT WINNING THE AUGUST 2001 MOBILITY SPO CONTRACT.”
{¶ 24} “THE TRIAL COURT ERRED IN DENYING AMTI’S MOTION FOR A
DIRECTED VERDICT ON ALL CLAIMS BECAUSE ITC PRODUCED NO
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EVIDENCE ON THE ESSENTIAL ELEMENT OF CAUSATION.”
{¶ 25} “THE TRIAL COURT ERRED IN DENYING AMTI’S MOTIONS FOR
JNOV ON ALL CLAIMS BECAUSE A REASONABLE JURY COULD NOT
CONCLUDE THAT ITC PROVED CAUSATION.”
Motions for Summary Judgement
{¶ 26} In its first assignment, AMTI contends that the trial court erred by
overruling its two motions for summary judgment. Specifically, AMTI argues that
ITC failed in its burden of coming forward with evidence which demonstrated the
existence of a genuine issue regarding whether AMTI proximately caused the
damages sustained by ITC when it lost the bid for the Mobility SPO contract. AMTI
claims that ITC finished behind three other competitors in the bidding for the
Mobility SPO contract in August of 2001. Specifically, AMTI asserts that evidence
of the Air Force’s ranking of the candidates established that ITC would not have
won the Mobility SPO contract even if AMTI had not interfered with ITC’s incumbent
employees. Thus, AMTI argues that ITC cannot prove, as a matter of law, that
AMTI proximately caused it damages.
{¶ 27} ITC argues that conflicting evidence existed at the time the motions for
summary judgment were filed regarding whether ITC stood behind any of the other
competitors in the ranking for the bids for the Mobility SPO contract. More
importantly, ITC asserts that the Air Force’s main concern in accepting a bid for the
August 2001 Mobility SPO contract was that it keep the incumbent employees in
place to perform the contract. ITC further asserts that the only reason that AMTI
won the contract was because it promised the Air Force that it could provide ITC’s
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incumbent workforce. Throughout the course of the litigation, ITC has consistently
maintained that it would have won the Mobility SPO contract but for AMTI’s tortious
interference with ITC’s incumbent workforce.
Standard of Review
{¶ 28} An appellate court reviews an award of summary judgment de novo.
Grafton v. Ohio Edison Co. (1996), 77 Ohio St.3d 102, 105. We apply the same
standard as the trial court, viewing the facts in the case in a light most favorable to
the non-moving party and resolving any doubt in favor of the non-moving party.
Viock v. Stowe-Woodward Co. (1983), 13 Ohio App.3d 7, 12.
{¶ 29} Pursuant to Civil Rule 56(C), summary judgment is proper if:
{¶ 30} “(1) No genuine issue as to any material fact remains to be litigated;
(2) the moving party is entitled to judgment as a matter of law; and (3) it appears
from the evidence that reasonable minds can come to but one conclusion, and
viewing such evidence most strongly in favor of the party against whom the motion
for summary judgment is made, that conclusion is adverse to that party.” Temple
v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327. To prevail on a motion for
summary judgment, the party moving for summary judgment must be able to point
to evidentiary materials that show that there is no genuine issue as to any material
fact, and that the moving party is entitled to judgment as a matter of law. Dresher v.
Burt (1996), 75 Ohio St.3d 280, 293. The non-moving party must then present
evidence that some issue of material fact remains for the trial court to resolve. Id.{¶ 31} “Causation” refers to the cause and effect relationship between
tortious conduct and a loss that must exist before liability for that loss may be
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imposed. Dobran v. Franciscan Med. Ctr., 149 Ohio App.3d 455, 459,
2002-Ohio-5378. While difficult to define, “proximate cause” is generally
established “‘where an original act is wrongful or negligent and, in a natural and
continuous sequence, produces a result [that] would not have taken place without
the act.’” Strother v. Hutchinson (1981), 67 Ohio St.2d 282, 287. It is also well
settled that because the issue of proximate cause is not open to speculation,
conjecture as to whether the breach of duty caused the particular damage is not
sufficient as a matter of law. See Townsley v. Cincinnati Gardens, Inc. (1974), 39
Ohio App.2d 5, 9. Further, a plaintiff must establish proximate cause by a
preponderance of the evidence. See Littleton v. Good Samaritan Hosp. & Health
Ctr. (1988), 39 Ohio St.3d 86, 92.
{¶ 32} In its merit brief, AMTI relies on two cases which it maintain support its
contention that ITC failed to establish that it would have won the Mobility SPO but
for the conduct of AMTI. In Costaras v. Dunnerstick, Lorain App. No.
04CA008453, 2004-Ohio-6266, a teacher employed by Clearview school district
sought employment with a competing school district. Id. The Clearview
superintendent contacted the superintendent from the competing district and
informed him that the teacher was already employed by Clearview and therefore,
unavailable for other employment. Id. The teacher brought suit against Clearview,
alleging tortious interference with a business opportunity. Id.{¶ 33} The appellate court held that the trial court erred when it failed to grant
Clearview’s motion for directed verdict because the teacher failed to produce any
evidence, other than her own testimony, that she would have been awarded the
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new teaching position but for the Clearview superintendent’s decision to contact the
superintendent from the other school district. Id. The court specifically found that
the teacher’s speculative testimony regarding how the prospective employer may
have reacted to the call from Clearview’s superintendent was insufficient to support
the element of proximate cause. Id.{¶ 34} In Technology for Energy Corp. v. Scandpower, A/S (C.A. 6, 1989),
880 F.2d 875, the Sixth Circuit Court of Appeals affirmed the district court’s
decision sustaining the defendants’ motion to dismiss pursuant to Fed.R.Civ.P. 41
finding that the plaintiff failed to prove that it probably would have been awarded a
contract but for defendants’ wrongful interference, as required under California law.
The court concluded that its decision “prevents the plaintiff from obtaining a
‘windfall’ in the form of damages for interference with an economic opportunity
which it would not have obtained even if the defendant had done nothing wrong.”
Id.{¶ 35} Upon review, we conclude that the facts in Costaras and Scandpower
are distinguishable from the facts in the instant case. Initially, we note that the
holdings in Costaras and Scandpower are distinguishable. In neither case relied
upon by AMTI did the plaintiffs come forward with convincing evidence which
created a genuine issue regarding whether they would have been awarded
employment (Costaras) nor a contract (Scandpower) but for the actions of the
defendants. Herein, ITC presented sufficient facts establishing a genuine issue
regarding whether the actions of AMTI proximately caused ITC to lose the Mobility
SPO contract in August of 2001. Although AMTI presented evidence that ITC
15
ranked fourth out of five bidders in the competition for the contract in August of
2001, ITC relied upon the deposition testimony of Fred Whitican, AMTI’s Dayton
Operations Manager, who stated that the continued service of ITC’s incumbent
employees was of primary concern to the Air Force when deciding to whom to
award the Mobility SPO contract after re-competing the contract in August of 2001.
While relevant to our inquiry, AMTI’s list provided by Lt. Karraker that ranks the
August of 2001 bidders is not the smoking gun which AMTI portrays to be. The list
is simply another piece of evidence to be taken into account when determining
whether AMTI is liable for ITC’s loss of the Mobility SPO contract in August of 2001.
Moreover, we note that the testimony provided by Lt. Karraker was partially
undermined by the fact that he submitted two sworn affidavits which contain
conflicting and contradictory averments. We also note that ITC presented
evidence that in the absence of KTT’s and AMTI’s tortious conduct prior to the first
bid in May of 2001, ITC would have been the only entity to submit a bid at that time
and would have been awarded the Mobility SPO contract, thus obviating the need
to issue a second RFP in August of 2001. Accordingly, the trial court did not err
when it overruled AMTI’s motions for summary judgment regarding the issue of
whether it proximately caused ITC to lose the Mobility SPO contract in August of
2001.
B. Motion for Directed Verdict
{¶ 36} As we recently stated in Stephenson v. Upper Valley Family Care,
Inc., Miami App. No. 07CA12, 2008-Ohio-2899:
{¶ 37} “Motions for a directed verdict during trial and for a judgment
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notwithstanding the verdict following trial are authorized by Civ.R. 50(A) and (B),
respectively. ‘The test to be applied by a trial court in ruling on a motion for
judgment notwithstanding the verdict is the same test to be applied on a motion for
a directed verdict. The evidence adduced at trial and the facts established by
admissions in the pleadings and in the record must be construed most strongly in
favor of the party against whom the motion is made, and, where there is substantial
evidence to support his side of the case, upon which reasonable minds may reach
different conclusions, the motion must be denied. Neither the weight of the
evidence nor the credibility of the witnesses is for the court's determination in ruling
upon either of the above motions. McNees v. Cincinnati Street Ry. Co. (1949), 152
Ohio St. 269, 89 N.E.2d 138; Ayers v. Woodard (1957), 166 Ohio St. 138, 140
N.E.2d 401; Civ.R. 50(A) and (B).’ Posin v. A.B.C. Motor Court Hotel, Inc. (1976),
45 Ohio St.2d 271, 275.”
{¶ 38} AMTI argues that it was entitled to a directed verdict because ITC
failed to adduce any evidence during trial that the Air Force would have awarded it
the Mobility SPO in August of 2001 but for AMTI’s conduct. ITC, however,
contends that it did, in fact, prove that AMTI’s tortious conduct proximately caused
ITC to lose the contract. Specifically, ITC asserts that AMTI’s tortious conduct and
conspiracy with KTT and the individual defendants resulted in the Air Force’s
decision to award the Mobility SPO contract to AMTI, rather than ITC, in August of
2001, based upon AMTI’s bid promising the return of ITC’s incumbent employees.
{¶ 39} It is undisputed that in May of 2001, only ITC and KTT submitted bids
to the Air Force for the Mobility SPO contract. We note that the Air Force invited
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four or five contractors to submit bids for the Mobility SPO contract in May of 2001,
but only ITC and KTT did so. ITC argues that the remaining contractors did not
submit bids because ITC’s position as the incumbent contractor provided too strong
an advantage in the May competition.
{¶ 40} Moreover, the evidence established that AMTI conspired with KTT for
approximately one year prior to the RFP in May of 2001, in an effort to help KTT
win the bid away from ITC. However, once the trial court enjoined KTT and the
individual defendants from competing against ITC in May of 2001, the Air Force
decided that the May RFP was “tainted” and cancelled the bid. The Air Force then
decided to re-compete the Mobility SPO contract in August of 2001. Accordingly,
ITC asserts that had AMTI not tortiously interfered with the May 2001 RFP, there
would have been no need to issue another RFP in August of 2001. ITC would
have been the sole bidder in the May competition and ostensibly would have been
awarded the contract. We also note that ITC adduced evidence that AMTI and
KTT improperly influenced the Air Force to issue the August of 2001 RFP absent
the former requirement of including the proposed employees’ resumes as part of
the bid. As a result, ITC asserts that multiple contractors who had not previously
submitted a bid in the May of 2001 RFP decided to submit bids in response to the
August of 2001 RFP.
{¶ 41} Throughout the course of the case, ITC argued that the Air Force’s
chief concern in re-competing the Mobility SPO contract in August of 2001 was
retaining ITC’s incumbent workforce. Accordingly, ITC asserts that without the
incumbent employees, a contractor would not stand much of a chance of winning
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the Mobility SPO contract. Specifically, Carl Canter testified that it is very difficult
to be awarded a government contract over the incumbent contractor who employs
the incumbent workforce, and it does not happen very often. Canter further
testified that ITC should have been awarded the Mobility SPO contract simply
because it was the incumbent contractor and had a strong record of past
performance with the Air Force. Anita Talwar testified that AMTI did not typically
bid against a strong incumbent.
{¶ 42} Fred Whitican provided the following testimony at trial regarding the
necessity of being able to instantly deliver ITC’s incumbent workforce upon being
awarded the Mobility SPO contract:
{¶ 43} “Whitican: *** We knew that Colonel Earehart and Mike Karraker and
Theresa Abney all wanted to have that same incumbent team back supporting them
the day after the [Mobility SPO] contract was awarded. So that was their intent.
You know, that’s how you win the contract, by giving the government what they
want.
{¶ 44} “***
{¶ 45} “ITC Counsel: So – so at this point you recognized that, really, from
your point of view, the [Air Force] didn’t care about your expertise at all. They just
wanted you to deliver the incumbents, and you believe they wanted you to deliver
KTT, right?
{¶ 46} “Whitican: Because when I met with Mike Karraker after we won [the
Mobility SPO contract], Mike Karraker flat out told me, AMTI did not win this
contract, the [incumbent] employees won this contract for you.”
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{¶ 47} Upon review, we conclude that the trial court did not err when it
overruled AMTI’s motion for directed verdict because ITC adduced sufficient
evidence during the trial from which a reasonable person could find by a
preponderance of the evidence that AMTI proximately caused ITC to lose the
Mobility SPO contract in August of 2001 by promising the immediate availability of
ITC’s incumbent employees if it was awarded the Mobility SPO contract.
Construed in a light most favorable to ITC, the evidence adduced at trial
established that AMTI won the Mobility SPO contract because it convincingly
represented to the Air Force that it had procured commitments from ITC’s
incumbent employees in derogation of ITC’s contractual rights pursuant to the
employment contracts entered into by the incumbent personnel. Accordingly, but
for AMTI’s tortious actions in that regard, ITC would have been awarded the
Mobility SPO contract in August of 2001.
C. Motion for JNOV
{¶ 48} “A motion for judgment notwithstanding the verdict presents an issue
of law. Though the court does not weigh the evidence or consider the credibility of
the witnesses, the court must evaluate the evidence for its sufficiency in relation to
the legal standard governing the claim or defense which the motion involves.
Furthermore, being a finding as a matter of law, the trial court’s judgment granting
or denying the motion is reviewed on appeal de novo.” O’Day v. Webb (1972), 29
Ohio St.2d 215.
{¶ 49} Initially, AMTI asserts that the trial court did not apply the correct legal
standard in order to assess whether it proximately caused ITC to lose the Mobility
20
SPO contract in August of 2001. In support of this assertion, AMTI directs us to a
portion of the trial court’s decision overruling its motion for JNOV issued on July 10,
2008, wherein the court stated as follows:
{¶ 50} “The general rule is that a defendant’s conduct is the proximate cause
of injury or death to another if the defendant’s conduct (1) is a ‘substantial factor’ in
bringing about the harm and (2) there is no other rule of law relieving the defendant
of liability. State v. Carter, Montgomery App. No. 21820, 2007-Ohio-5570(comparing the causation standard in criminal cases to the proximate cause
standard in civil cases).”
{¶ 51} In light of the excerpt above, AMTI argues that the trial court
incorrectly utilized the “substantial factor” test, rather than the “but for” test, when it
determined that AMTI proximately caused ITC to lose the Mobility SPO contract in
August of 2001. Upon review, however, it is clear that the trial court merely
inserted a description of the “substantial factor” test used in criminal cases in an
effort to compare it to the “but for” test applied in civil cases. With the exception of
that particular citation in the decision, the trial court did not mention nor attempt to
apply the “substantial factor” test when it overruled AMTI’s motion for JNOV.
{¶ 52} In fact, the trial court clearly and unequivocally stated its reliance on
the “but for” standard when it found as follows:
{¶ 53} “Second, reasonable minds could have found that, despite the much
higher price tag, ITC would have won the August 2001 bid but for AMTI promising
WPAFB that it could guarantee the Incumbent Employees would continue on the
project.”
21
{¶ 54} Contrary to AMTI’s assertion, the trial court did not apply the
“substantial factor” test in it analysis. Rather, it is clear that the trial court properly
utilized the “but for” test in order to determine whether AMTI’s tortious acctions
proximately caused ITC to lose the Mobility SPO contract in August of 2001.
{¶ 55} Construing the evidence most strongly in favor of the non-moving
party, ITC in this case, we find that the trial court’s decision overruling AMTI’s
motion for JNOV was supported by substantial evidence. When ITC is afforded
the benefit of all reasonable inferences from the evidence, it is clear that the trial
court did not err, and the jury’s verdict finding that AMTI proximately caused ITC to
lose the Mobility SPO contract in August of 2001 should not be set aside.
{¶ 56} Accordingly, AMTI’s first, second, and third assignments of error are
overruled.
III
{¶ 57} Because AMTI’s fourth assignment of error and ITC’s first
cross-assignment of error are interrelated, they will be discussed together as
follows:
{¶ 58} “THE TRIAL COURT ERRED IN DENYING AMTI’S MOTION FOR A
NEW TRIAL ON ALL CLAIMS AND IN CONDITIONALLY GRANTING AMTI’S
MOTION FOR REMITTITUR.”
{¶ 59} “THE TRIAL COURT ABUSED ITS DISCRETION IN FINDING THAT
THE JURY’S COMPENSATORY DAMAGES VERDICTS WERE NOT
SUPPORTED BY COMPETENT, CREDIBLE EVIDENCE AND, ACCORDINGLY,
GRANTING AMTI’S MOTION FOR REMITTITUR.”
22
{¶ 60} In its fourth assignment, AMTI contends that the trial court erred by
overruling its motion for a new trial regarding all of ITC’s claims for relief. AMTI
also argues that the trial court erred when it remitted the compensatory damages
awarded by the jury from $5,752,894.00 to $1,970,599.44. Specifically, AMTI
argues that the remitted amount was not supported by competent and credible
evidence and should have been reduced further by the trial court. Conversely, ITC
argues that the jury’s compensatory damages verdicts were appropriate and that
the trial court erred by granting AMTI’s motion for remittitur.
{¶ 61} Following the jury verdict, AMTI filed a motion for new trial pursuant to
Civ. R. 59(A)(6) and an alternative motion for vacatur or remittitur of the
compensatory and punitive damages awards. The trial court overruled the motion
for new trial, but granted AMTI’s request for remittitur regarding the compensatory
damages. AMTI argues that it is entitled to a new trial because the jury verdict was
not sustained by the weight of the evidence and is contrary to law. AMTI further
asserts that the trial court’s remittitur “failed to remedy the legal errors inherent in
the jury verdict” with respect to the compensatory damages award.
{¶ 62} Whether to grant or deny a motion for a new trial rests with the sound
discretion of the trial court, and its judgment will not be disturbed absent an abuse
of discretion. Yungwirth v. McAvoy I (1972), 32 Ohio St.2d 285. An abuse of
discretion is shown when a decision is unreasonable; that is, when there is no
sound reasoning process that would support the decision. AAA Enterprises v. River
Place Community (1990), 50 Ohio St.3d 157.
{¶ 63} “Civ. R. 59(A)(6) authorizes the trial court to vacate a judgment and
23
order a new trial on a finding that the verdict on which the judgment was entered ‘is
not sustained by the weight of the evidence.’ When that claim is made, the court
must review the evidence and pass in a limited way on the credibility of the
witnesses. (Internal citations omitted). It must appear to the court that a manifest
injustice has been done and that the verdict is against the manifest weight of the
evidence. Rohde v. Farmer (1970), 23 Ohio St.3d 82. For example, where it
appears probable that a verdict is based on false testimony, a motion for a new trial
should be granted. (Internal citations omitted). A verdict is not against the manifest
weight of the evidence merely because the judge would have decided the case
differently. (Internal citations omitted). If the jury’s verdict is supported as to each
element of the plaintiff’s case by some competent and apparently credible
evidence, a defendant’s motion for new trial should not be granted. (Internal
citations omitted). Conversely, if evidence the defendant offered to rebut one or
more of those elements of the plaintiff’s case is competent and apparently credible,
a plaintiff’s motion should not be granted.” Bedard v. Gardner, Montgomery App.
No. 20430, 2005-Ohio-4196.
{¶ 64} “Judgments supported by some competent, credible evidence going to
all the essential elements of the case will not be reversed by a reviewing court as
being against the manifest weight of the evidence.” C.E. Morris Co. v. Foley
Construction Co. (1978), 54 Ohio St.2d 279, syllabus. A judgment is not against
the manifest weight of the evidence unless “[t]he court, reviewing the entire record,
weighs the evidence and all reasonable inferences, considers the credibility of
witnesses and determines whether, in resolving conflicts in the evidence, the jury
24
clearly lost its way and created such a manifest miscarriage of justice that the
conviction must be reversed and a new trial ordered.” Bede v. The Dayton Power &
Light Co., Montgomery App. No. 18705, 2002-Ohio-2378. In determining whether
a judgment is against the manifest weight of the evidence, there is “a presumption
that the findings of the trier-of-fact were indeed correct.” Seasons Coal Co. v. City
of Cleveland (1984), 10 Ohio St.3d 77, 80.
{¶ 65} AMTI initially argues that a new trial should have been granted
because the jury verdict was not supported by competent and credible evidence
regarding whether but for the tortious conduct of AMTI, ITC would have won the
Mobility SPO contract. As we thoroughly discussed in our analysis of AMTI’s
second and third assignments of error, ITC presented ample evidence during trial
from which a reasonable person could find by a preponderance of the evidence that
AMTI proximately caused ITC to lose the Mobility SPO contract in August of 2001
by promising the immediate availability of ITC’s incumbent employees if it was
awarded the Mobility SPO contract. The evidence adduced by ITC established
that the contractor who could provide the incumbent employees would be awarded
the Mobility SPO contract. ITC was the only contractor that could legally state that
it could provide the incumbent workforce in its bid to the Air Force. By essentially
stealing ITC’s incumbent employees, who were clearly a prized asset of the Air
Force, AMTI ensured that it would be awarded the Mobility SPO contract and that
ITC would lose the bid. Accordingly, we conclude that ITC adduced competent
and credible evidence which established that but for the actions of AMTI, ITC would
have won the Mobility SPO contract.
25
{¶ 66} In its second argument in support of this assignment, AMTI contends
that under Civ. R. 59(A)(7), it “is entitled to a new trial on all claims because the
jury’s verdict is contrary to the trial court’s jury instructions." Under Civ. R.
59(A)(7), a trial court can grant a new trial if the judgment rendered is contrary to
law.
{¶ 67} AMTI argues that because the jury’s verdict was in excess of the
amount of lost profits introduced into evidence that they are entitled to a new trial.
The jury’s instructions allowed the jury to award compensatory damages in an
amount reasonably determined by (1) the actual loss, or lost profits, caused to ITC,
or (2) any unjust enrichment gained by the defendants, whichever was greater.
The amount of lost profits was to be determined by calculating how much money
ITC would have received from complete performance of the contract with Mobility
SPO, minus any costs saved, if AMTI had not interfered with the contract.
However, the jury instructions were clear in limiting the amount of lost profits to only
the base year of the Mobility SPO contract. It is undisputed that the lost profits on
the base year of the contract would have been $1,247,638.00. Despite the
limitation on the amount of lost profits, the jury returned a verdict in the amount of
$5,752,894.00, an award $4,505,256.00 in excess of the lost profits limit. After
denying AMTI’s motion for a new trial, the trial court granted its motion for remittitur
and reduced the amount of compensatory damages to $1,970,599.44. ITC
accepted the remitted amount.
{¶ 68} AMTI further asserts that because the jury disregarded the court’s
instructions in assessing damages that a new trial, and not remittitur, was the only
26
proper remedy. We disagree. The assessment of damages is usually entirely within
the discretion of the jury, and the court is disallowed to alter a jury’s decision.
Menda ex rel. Justin v. Springfield Radiologists, Inc, Clark App. No. 2001-CA-91,
2002-Ohio-6785. However, "a remittitur is proper if the jury’s award is so
excessive as to appear to be the result of passion or prejudice, or if the amount
awarded is against the manifest weight of the evidence." Id. We have recognized
a four part test in allowing a court to grant remittitur, "(1) unliquidated damages are
assessed by a jury, (2) the verdict is not influenced by passion or prejudice, (3) the
award is excessive, and (4) the plaintiff agrees to the reduction in damages." Bd. of
Trustees of Sinclair Community College Dist. v. Farra, Montgomery App. No.
22886, 2010-Ohio-568.
{¶ 69} The facts present in the instant case satisfy the test for allowing a
court to grant remittitur. First, the damages assessed here were the amount of lost
profits to ITC stemming from AMTI’s actions. This was not an assessment of a
liquidated damages award. Second, there is no evidence on the record to find that
the jury was influenced by passion or prejudice. Third, the award was excessive.
The uncontested evidence introduced at trial found ITC’s lost profits on the base
year of the Mobility SPO contract to be $1,247,638.00. Lastly, ITC agreed to the
remitted damages amount. Accordingly, the trial court was within its discretion to
remit the amount of the jury award to the damages supported by the weight of the
evidence pursuant to our ruling in Farra, and the granting of a new trial was not
appropriate in this case.
{¶ 70} The present case is distinguishable from the Davis and Baeppler
27
cases cited in AMTI’s brief. In Baeppler, the Eighth District stated that it would have
awarded the defendants a new trial, had they not vacated the judgment entirely, on
a finding that the jury’s verdict was contrary to law. Baeppler v. McMahan (Apr. 13,
2000), Cuyahoga App. No. 74938, 75131, 76042. The issue with the jury verdict
in Baeppler, however, was not that the award was in excess of the evidence
presented at trial. Id. The verdict was contrary to law in Baeppler because the
damages awards were inconsistent as applied to all the defendants. Id. Because
the plaintiff had argued liability under a theory of respondeat superior, the judgment
required, by law, a finding that either the employer was not liable at all for the
actions of its employee, or that it was equally responsible. Id. Thus, a jury award
of differing damages amongst the defendants was contrary to law, and a new trial
would have been appropriate. Id. That is not at issue in the instant case. The
damages award was not inconsistent as applied to the defendants, but in excess of
the determined lost profits, making remittitur an appropriate order.
{¶ 71} Furthermore, the circumstances in Davis that warranted a new trial on
the damages award are also not present in this case. In Davis, the Fourth District
found that the trial court abused its discretion in not granting the motion for new
trial. Davis v. Gampp (Dec. 6, 1999), Athens App. No. 98CA2596. In Davis, the
court found that the verdict form was substantively defective and, therefore,
contrary to law. Id. In instructing the jury, the trial court specifically stated that any
damage amount must be limited to twenty dollars per day, for an eleven day period.
Id. Although the maximum award could have only been $220, the jury returned an
award in the amount of $1,170.00. Id. Davis is distinguishable because the jury
28
was not instructed as to the exact amount it could award, but was told to make
reasonable approximation as to the amount of damages. Moreover, unlike Davis,
the trial court in the instant case had the power to remedy the jury’s excessive
award by remitting the damages amount which was accepted by ITC. Therefore, a
new trial was not necessary to correct the amount of compensatory damages
awarded by the jury.
{¶ 72} In its next argument, AMTI argues that the judgment was contrary to
the court’s instructions because the jury awarded duplicative compensatory
damages. In the alternative, AMTI contends that it is entitled to further remittitur
because the remitted amount is contrary to law.
{¶ 73} Initially, we note that the remittitur ordered by the trial court on the
jury’s award of compensatory damages was proper given the court’s finding that
there was no evidentiary basis for the jury’s original award of $5,752,894.00.
Specifically, the trial court found that ITC was limited to presenting evidence of its
lost profits for the base year of the Mobility SPO contract since the evidence of
damages for the years following the base year of the contract was too speculative.
It is undisputed that the lost profits for the base year of the contract were
$1,247,638.00, as testified to by Joseph Springer, ITC’s expert.
{¶ 74} Moreover, the trial court instructed the jury several times that it could
not award duplicative damages. Despite the admonition, the jury awarded ITC
$5,752,894.00 in compensatory damages. Finding that this award was
unsupported by the evidence, as well as the information in the verdict forms, the
trial court remitted the amount of compensatory damages to $1,970,599.44. We
29
note that the final jury instructions read by the trial court state as follows:
{¶ 75} “Lost profits are calculated by deciding what ITC would probably have
received from performing the contract for the Mobility SPO had Defendants not
committed their wrongful acts. From this sum, you should subtract the amount, if
any, of variable costs that ITC saved by not performing the contract for the Mobility
SPO. With respect to lost future profits, ITC’s evidence need only be reasonable,
not specific.”
{¶ 76} In light of the portion of the instructions regarding lost future profits, it
is understandable that the jury may have attempted to compensate ITC for the
profits it would have generated after performing the base year of the Mobility SPO
contract, assuming, of course, that ITC was awarded the contract for the following
years. That could explain the additional four million dollars the jury awarded to ITC
in compensatory damages against AMTI. The verdict forms are inconclusive in
this regard. Nevertheless, in a pre-trial ruling, the trial court expressly limited ITC
to presenting evidence of its lost profits for only the base year of the Mobility SPO
contract since the court considered the evidence of damages for the years following
the base year to be too speculative. We note that the jury instructions stated as
follows:
{¶ 77} “*** Because every contract year for the Mobility SPO beyond the
base year was a discretionary option by the government, ITC’s damages are limited
to the lost profits it would have earned on the base year of the Mobility SPO
contract.”
{¶ 78} The jury instructions further state in pertinent part:
30
{¶ 79} “While ITC asserted three separate claims against AMTI, ITC has
asserted a single form of injury of lost profits or unjust enrichment, whichever is
greater. *** If you find, however, that ITC has satisfied its burden of proof on any of
its claims, it would be entitled to a single award of damages ***.”
{¶ 80} Contrary to AMTI’s assertions, the trial court’s remitted compensatory
damages award did not contain any duplicative sums. In light of the trial court’s
pre-trial rulings, as well as the plain language in the jury instructions, the jury was
limited to the value in lost profits for base year of the Mobility SPO contract
regarding the assessment of compensatory damages against AMTI.
{¶ 81} That limitation, however, did not affect the jury’s assessment of
compensatory damages against KTT for misappropriation of trade secrets. The
jury was specifically instructed that “ITC [was] entitled to recover compensatory
damages that may include: (1) the actual loss to ITC proximately caused by the
misappropriation; or (2) the amount gained by AMTI and/or KTT from its wrongful
use of ITC’s trade secrets, whichever is greater.” Accordingly, the jury was free to
assess separate compensatory damages against KTT without regard to the Mobility
SPO contract base year limitation on compensatory damages against AMTI. A
distinct basis, therefore, clearly exists for the jury’s $471,744.00 award against KTT
to ITC, and the amount was not duplicative of any sums assessed against AMTI in
compensatory damages.
{¶ 82} Thus, the trial court properly remitted the amount of compensatory
damages for which there was no evidentiary basis presented at trial.
{¶ 83} Using the verdict forms completed by the jury as a guide, the trial court
31
calculated the remitted compensatory damages as follows:
{¶ 84} “ITC’s lost profits, as testified to by Springer = $1,247,638.00
{¶ 85} “+
{¶ 86} “Damages attributed to KTT, imputed to AMTI as a result of civil
conspiracy = $471,744.00
{¶ 87} “+
{¶ 88} “Damages attributed to the individual defendants (disgorgement of
salaries), imputed to AMTI as a result of civil conspiracy = $251,217.44
{¶ 89} “= $1,970,599.44 (Total Remitted Compensatory Damages Awarded
by trial court).”
{¶ 90} AMTI, however, argues that it is entitled to further remittitur because
the trial court’s remitted award improperly imputed the damages awarded against
KTT to AMTI when the jury did not find that a civil conspiracy existed between AMTI
and KTT. To establish a claim of civil conspiracy, a plaintiff must prove (1) a
malicious combination, (2) involving two or more persons, (3) causing injury to
person or property, and (4) the existence of an unlawful act independent from the
conspiracy itself. Werthmann v. DONet, Inc., Montgomery App. No. 20814,
2005-Ohio-3185, ¶93. “The malice portion of the tort is ‘that state of mind under
which a person does a wrongful act purposely, without a reasonable or lawful
excuse, to the injury of another.’” Gibson v. City Yellow Cab Co. (Feb. 12, 2001),
Summit App. No. 20167 (citations omitted). To recover for civil conspiracy, the
plaintiff must suffer actual damages. Reno v. City of Centerville, Montgomery App.
No. 20078, 2004-Ohio-781, ¶33; see Danis v. Great Am. Ins. Co., 159 Ohio App.3d
32119, 133, 2004-Ohio-6222.
{¶ 91} In support of it argument, AMTI draws our attention to Juror
Interrogatories nine and ten, which state in pertinent part:
{¶ 92} “9, if you find by the greater weight of the evidence that AMTI engaged
in a civil conspiracy with individual defendants or ITC’s employees to cause ITC
harm, again, you have a yes or no answer. ***
{¶ 93} “10, civil conspiracy, do you find that AMTI’s engagement in civil
conspiracy with individual defendants or ITC’s employees to cause ITC harm was
the proximate cause of ITC’s damages. ***”
{¶ 94} Specifically, AMTI argues that neither interrogatory asked the jurors to
decide whether AMTI engaged in a civil conspiracy with KTT, only the individual
defendants. Therefore, AMTI contends that it could not be held jointly and
severally liable for damages attributed to KTT for civil conspiracy. AMTI, however,
ignores the effect of Juror Interrogatory 14, as well as a portion of the jury
instructions referencing joint and several liability in regards to civil conspiracy.
{¶ 95} Juror Interrogatory 14 states in pertinent part:
{¶ 96} “14, state the amount of compensatory damages sustained by ITC, if
any, from its loss of the contract that occurred as a result of AMTI’s civil conspiracy
with the other defendants. ***”
{¶ 97} ITC argues that the “other defendants” discussed in this interrogatory
refer to KTT and the individual defendants. Accordingly, it was not unreasonable
for the jury to find that AMTI was jointly and severally liable for the $471,744.00 in
compensatory damages attributed to KTT for civil conspiracy. This interpretation is
33
further strengthened by the jury instructions which state in pertinent part:
{¶ 98} “If you find that AMTI conspired with KTT and/or the individual
defendants, AMTI will be jointly and severally liable for the damages KTT and the
individual defendants owe ITC. This means that while the individual defendants
and KTT will still be liable for any damages they caused ITC to incur, AMTI will also
be liable for the damages incurred by the other defendants’ acts.”
{¶ 99} Thus, we conclude that it was neither unreasonable nor contrary to
law for the trial court to include in its remitted compensatory damages award
against AMTI the $471,744.00 attributed to KTT for civil conspiracy. The jury
correctly found, based on the jury instructions and interrogatories, that AMTI
conspired with KTT, and that AMTI was, therefore, liable for damages awarded
against KTT.
{¶ 100} Lastly, AMTI argues that it is entitled to further remittitur because the
remitted award erroneously imputes disgorgement of wages and benefits paid to
the individual defendants to AMTI. Specifically, AMTI argues that the individual
defendants’ disgorgement cannot be attributed to AMTI as part of a conspiracy
because the jury determined that the individual defendants caused ITC zero dollars
in damages as a result of the conspiracy. We disagree.
{¶ 101} The instruction for civil conspiracy broadly states that if the jury found
that “AMTI conspired with KTT and/or the individual defendants, AMTI will be jointly
and severally liable for the damages KTT and the individual defendants owe ITC.”
Ultimately, the jury found that the individual defendants were collectively liable to
ITC in the amount of $251,217.44. Pursuant to the jury instructions, AMTI is jointly
34
and severally liable to ITC for that amount. While AMTI correctly observed that
disgorgement is a penalty imposed for unfaithful performance, it does not cite any
authority in support of its argument that it cannot be held jointly and severally liable
for the individual defendants’ disgorgement of compensation.
{¶ 102} In a civil conspiracy, the acts of co-conspirators are attributable to
one another. Williams v. Aetna Fin. Co. (1998), 83 Ohio St.3d 464. Moreover, a
co-conspirator may be liable for both compensatory and punitive damages resulting
from the conspiracy. Accordingly, the trial court did not err when it added the
individual defendants’ disgorged wages and benefits to the amount of
compensatory damages for which AMTI was jointly and severally liable.1
{¶ 103} AMTI’s fourth assignment of error is overruled, as is ITC’s first
cross-assignment of error.
IV
{¶ 104} Because they are interrelated, AMTI’s fifth assignment of error and
ITC’s second cross-assignment of error will be discussed together:
{¶ 105} “THE TRIAL COURT’S REMITTED AWARD OF PUNITIVE
DAMAGES IS UNCONSTITUTIONALLY EXCESSIVE AND VIOLATES OHIO’S
LIMITS ON PUNITIVE DAMAGES.”
{¶ 106} “THE TRIAL COURT ABUSED ITS DISCRETION IN FINDING THAT
1
We note that although the trial court specifically found that AMTI was
jointly and severally liable for the tortious actions of KTT and the individual
defendants, the court did not include the information in the general verdict
required in a jury action pursuant to R.C. 2307.22 and R.C. 2307.23 regarding
the percentages of tortious conduct attributable to the various defendants.
AMTI, however, did not object to the trial court’s omission at any stage during the
35
THE JURY’S PUNITIVE DAMAGES VERDICT WAS NOT SUPPORTED BY
COMPETENT, CREDIBLE EVIDENCE AND, ACCORDINGLY, GRANTING AMTI’S
MOTION FOR REMITTITUR.”
{¶ 107} In its fifth assignment, AMTI contests the trial court’s remitted
punitive damages award as unconstitutionally excessive and violative of Ohio’s
legal standards governing punitive damages. We disagree.
{¶ 108} Initially, we note that the assessment of damages lies “so thoroughly
within the province of the [trier of fact] that a reviewing court is not at liberty to
disturb the [trier of fact’s] assessment” absent an affirmative finding of passion and
prejudice, or a finding that the award is manifestly excessive or inadequate.
Moskovitz v. Mt. Sinai Med. Ctr., 69 Ohio St.3d 638, 655, 1994-Ohio-324. A new
trial may be granted due to “excessive or inadequate damages, appearing to have
been given under the influence of passion or prejudice.” Civ.R. 59(A)(4).
Whether to grant or deny a motion for a new trial rests with the sound discretion of
the trial court, and its judgment will not be disturbed absent an abuse of discretion.
Yungwirth v. McAvoy I (1972), 32 Ohio St.2d 285. An abuse of discretion is shown
when a decision is unreasonable; that is, when there is no sound reasoning
process that would support the decision. AAA Enterprises v. River Place
Community (1990), 50 Ohio St.3d 157.
{¶ 109} The U.S. Supreme Court has held that punitive damages awards
violate due process when the awards can be characterized as “grossly excessive”
in relation to the state’s legitimate interest in punishing unlawful conduct and
instant litigation. Accordingly, AMTI has waived any error in this regard.
36
deterring its repetition. Wightman v. Consolidated Rail Corp., 86 Ohio St.3d 431,
439, 1999-Ohio-119. The U.S. Supreme Court identified three “guideposts” to be
used when determining whether punitive damages awards are unconstitutionally
excessive: “1) the degree and reprehensibility of the defendant’s conduct; 2) the
disparity between the actual or potential harm suffered by the plaintiff and the
punitive damages award; and 3) the difference between the punitive damages
awarded by the jury and the civil penalties authorized or imposed in comparable
cases.” Blust v. Lamar Advertising Co., Montgomery App. No. 19942,
2004-Ohio-2433, quoting State Farm Mut. Auto Ins. Co. v. Campbell (2003), 538
U.S. 408, 418, 123 S.Ct. 1513, 155 L.Ed.2d 585; BMW of N. Am., Inc. v. Gore
(1996), 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809.
{¶ 110} “The degree of reprehensibility of the defendant is ‘[p]erhaps the
most important indicium of the reasonableness of a punitive damages award.’”
Winner Trucking, Inc. v. Victor L. Dowers & Assoc., Darke App. No. 1695,
2007-Ohio-3447, quoting BMW, 517 U.S. at 575. In assessing the reprehensibility
of the conduct in question, courts are to consider five factors: “1) whether the harm
caused was physical as opposed to economic; 2) whether the tortious conduct
evinced a reckless disregard of the health or safety of others; 3) whether the target
of the conduct had financial vulnerability; 4) whether the conduct involved repeated
actions or was an isolated incident; and 5) whether the harm was the result of
intentional malice, trickery, deceit, or mere accident.” State Farm, 538 U.S. at 419.
“The existence of any one of these factors weighing in favor of a plaintiff may not
be sufficient to sustain a punitive damages award; and the absence of all them
37
renders any award suspect.” Id.
{¶ 111} It is in the area of reprehensibility that AMTI fares most poorly. The
trial court found that four of the five reprehensibility factors existed in the instant
case which justified a substantial award of punitive damages. First, the trial court
found that the harm evinced by AMTI against ITC was clearly economic rather than
physical. While the court found that no evidence was presented which related to
the personal safety of ITC or its employees, it found that AMTI’s tortious conduct
evinced a reckless disregard for ITC’s rights with respect to the employment
contracts with its incumbent employees, as well as ITC’s rights with respect to the
expectation of privacy for their trade secrets. Upon review, we agree with the trial
court that while the first factor was not present, AMTI sufficiently disregarded ITC’s
rights in order to meet the second reprehensibility factor.
{¶ 112} With respect to the third factor, the trial court found that ITC
presented sufficient evidence of financial vulnerability. Canter testified that bidding
for government contracts is very competitive and that it is difficult to get “invited to
the dance.” By tortiously interfering with ITC’s incumbent employees and unfairly
winning the contract, AMTI guaranteed that ITC would not be awarded the Mobility
SPO contract, thereby reducing the ability of a private contractor to generate
income. ITC adduced evidence which established that it lost approximately
one-third of its business as a result of AMTI’s tortious conduct. Arguably more
important to ITC was the loss of twenty-two of its highly skilled and valuable
employees. “Although the present case undisputedly presents economic rather
than physical harm, cases involving economic injury nonetheless may warrant an
38
award of substantial punitive damages when the harm is committed ‘intentionally
through affirmative acts of misconduct or when the party is financially vulnerable.’”
Am. Chem. Soc. v. Leadscope, Franklin App. No. 08AP-1026, 2010-Ohio-2725,
quoting Gore, 517 U.S. at 576.
{¶ 113} As for the fourth factor, the trial court found that AMTI’s tortious
conduct in the instant case was not an isolated incident. In fact, AMTI had a
history of engaging in unfair and deceptive business practices dating back to 1998
involving the unauthorized use of a competitor’s incumbent employees to gain an
improper advantage in bidding for government contracts. Specifically, AMTI
represented to the Federal Aviation Administration that it could supply employees
from Overlook Systems Technology if it was awarded the contract. AMTI v. Fed.
Aviation Admin. (C.A.D.C., 2000), 211 F.3d 633, 634-634. Overlook, however, had
not agreed to certain labor rates proposed by AMTI. Id. at 635. AMTI, therefore,
had no basis to claim that it could provide Overlook’s incumbent employees. Id.AMTI was awarded the contract, but the FAA later determined that AMTI’s
representations regarding Overlook were unauthorized and reopened the bid. Id.{¶ 114} After AMTI won the second bid and was awarded the contract, it
initiated litigation against Overlook. AMTI v. Overlook Sys. Technology, Inc., Va.
Cir. No. 177962. Overlook counterclaimed against AMTI for breach of contract,
tortious interference with contract, statutory business conspiracy, and fraud. Id.The jury ultimately found in favor of Overlook regarding all of its claims and
awarded it compensatory and punitive damages. Id. The judgment in Overlook put
AMTI on notice that its corporate practice involving interfering with another
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company’s incumbent employees was improper and illegal. Despite this
revelation, AMTI proceeded to conspire with KTT and the individual defendants to
ensure that ITC lost the Mobility SPO contract in order to tortiously acquire it for
themselves. Accordingly, we find that the fourth reprehensibility factor was met.
{¶ 115} Regarding the fifth and final factor, the evidence adduced at trial
supports a finding that AMTI’s conduct involved intentional malice, trickery, and
deceit. In conjunction with KTT and the individual defendants, AMTI designed and
implemented a plan to obtain ITC’s trade secrets and incumbent employees in
order to win a government contract away from ITC. Clearly, this was no mere
accident on AMTI’s part. Additional evidence, including emails between KTT and
employees at AMTI establish that AMTI was aware that its actions with respect to
ITC’s incumbent employees was improper. In fact, the bulk of evidence presented
by ITC was premised upon AMTI’s intentional deceptive acts, which were initiated
in an effort to ensure that ITC lost and AMTI won the Mobility SPO contract. We
also note that during the punitive damages phase of the trial after AMTI had been
found liable, Talwar, Hooper, and Whitican still asserted that neither AMTI nor any
of its employees had done anything wrong. Significantly, Talwar and Whitican
both testified that AMTI still has a policy of obtaining proprietary information
regarding competitors’ incumbent employees in order to gain an unfair advantage in
the bidding process for government contracts.
{¶ 116} Four of the five reprehensibility factors exist in the instant case.
Therefore, an award of punitive damages was proper. Now, we must determine
whether the trial court’s decision to order a remittitur of the punitive damages was
40
proper, and if so, whether the remitted amount satisfies due process.
{¶ 117} As we recently stated in Winner Trucking, Inc. v. Victor L. Dowers &
Assoc., Darke App. No. 1695, 2007-Ohio-3447:
{¶ 118} “There is no magic formula for determining the proper amount of
punitive damages. Rather, the amount that should be awarded is the amount that
best accomplishes the twin aims of punishment and deterrence as to that
defendant. ‘We do not require, or invite, financial ruination of a defendant that is
liable for punitive damages. While certainly a higher award will always yield a
greater punishment and greater deterrent, the punitive damages award should not
go beyond what is necessary to achieve its goals. The law requires an effective
punishment, not a draconian one.’ [Dardinger v. Anthem Blue Cross & Blue Shield,
98 Ohio St.3d 77, 2002-Ohio-7113, 178].”
{¶ 119} Upon this record, we find that the trial court did not err when it found
that the punitive damages awarded by the jury were “unconstitutionally excessive,”
and remitted the amount of damages from $17,000,000.00 to $5,832,974.34.
Although AMTI’s actions in the instant case were particularly egregious, the jury’s
award of $17,000,000.00 was clearly excessive. No evidence exists on the record,
however, to support a finding that the jury was motivated by passion or prejudice,
and ITC accepted the trial court’s remittitur of the punitive damages award. We
conclude that the trial court did not abuse its discretion when it granted AMTI’s
motion for remittitur.
{¶ 120} After ordering remittitur, the trial court noted that the jury apparently
used a 2.96:1 ratio for determining the original award of compensatory and punitive
41
damages, to wit: $5,752,894.00 in compensatory damages and $17,000,000.00 in
punitive damages. Utilizing the same ratio, the trial court remitted the damages to
$1,970,599.44 in compensatory and $5,832,974.34 in punitive damages.
{¶ 121} AMTI argues that the remitted damages award is still excessive and
a 1:1 ratio between compensatory and punitive damages is the maximum award
that is constitutionally permitted. In support of its argument, AMTI relies on two
cases from the Sixth Circuit Court of Appeals for the proposition that no greater
than a 1:1 ratio between compensatory and punitive damages is constitutionally
permissible when the compensatory damages award is substantial. Bach v. First
Union Natl. Bank (C.A.6, 2007), 486 F.3d 150 (ordering a remittitur of a
$2,628,600.00 punitive damages award to $400,000.00 where the compensatory
award was $400,000.00); Clark v. Chrysler Corp. (C.A.6, 2006), 436 F.3d 594(ordering a remittitur of a $3,000,000.00 punitive damages award to $471,258.26
where the compensatory award was $235,629.26). We note that AMTI incorrectly
asserts that the damages ratio in Clark was 1:1. Rather, the Sixth Circuit found
that an award ratio of 2:1 was acceptable for due process purposes. Clark, 436
F.3d at 608.
{¶ 122} Bach involved a bank that continued to report unfavorable credit
information regarding an elderly widow even after she contacted the bank and
informed it that the information was inaccurate. Bach, 486 F.3d 150, 155. We note
that the Sixth Circuit only found that two of the five reprehensibility factors existed in
Bach. Id. Specifically, the court found that the bank did not act “with reckless
disregard for the health and safety of others,” engage in repeated instances of
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misconduct, nor act with “intentional malice.” Id. The court acknowledged that the
“absence of these factors substantially undercuts [the widow’s] attempts to justify
the size of the punitive damages in this case.” Id.{¶ 123} In Clark, the court found only one of the five reprehensibility factors
weighed in favor of a large punitive damages award where a design defect in an
automobile was found to have proximately caused the death of the driver. 436 F.3d
at 605. We note that the Clark court found that Chrysler’s negligent conduct did
not “replicate [any] prior transgressions,” but was an isolated incident. Id. at 604.
Moreover, the court found that Chrysler did not act with intentional malice, trickery
or deceit, and did not intend to harm the decedent. Id. at 605. Accordingly, the
court further held that the factors viewed as a whole indicate that defendant’s
“conduct was not sufficiently reprehensible to support such a large punitive damage
award.” Id. at 605.
{¶ 124} In State Farm, the U.S. Supreme Court declined to impose a
bright-line ratio which a punitive damages award cannot exceed, “but noted ‘that
few awards exceeding a single-digit ratio between punitive and compensatory
damages, to a significant degree, will satisfy due process.’” 538 U.S. at 425. We
recently approved a $35,000.00 punitive damages award against a car dealership,
even though the compensatory damages award was only $4,776.00. Smith v. GMC,
168 Ohio App.3d 336, 347, 2006-Ohio-4283. Therein, we stated as follows:
{¶ 125} “The ratio of punitive damages to the total actual injury suffered is
less than 8 to 1. Finally, we conclude that the large punitive damage award is
appropriate in order to deter Walker from future conduct of the kind that occurred in
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this case.”
{¶ 126} In the instant case, four of the five reprehensibility factors are
present. Specifically, AMTI essentially conspired to steal a lucrative government
contract by promising the Air Force that it could deliver a competitor’s incumbent
employees. AMTI engaged in this tortious conduct even after being put on notice
by the prior judgment in Overlook that its actions were illegal. “[E]vidence that a
defendant has repeatedly engaged in prohibited conduct while knowing or
suspecting that it was unlawful would provide relevant support for an argument that
strong medicine is required to cure the defendant’s disrespect for the law.” Gore,
517 U.S. at 576-77. The evidence established that AMTI acted with intentional
malice and fully intended to harm ITC. ITC lost one-third of its business and
twenty-two of its employees as a direct result of AMTI’s tortious conduct. AMTI
never acknowledged that its conduct was illegal, nor did it acknowledge that it
would refrain from said conduct in the future. In fact, Whitican testified that “that’s
the way business is done at [WPAFB] ***.” Accordingly, the trial court did not err
when it awarded ITC the remitted punitive damages award of $5,832,974.34. In
light of AMTI’s knowing and intentional tortious conduct, a substantial punitive
damages award is appropriate, and a 2.96:1 ratio for determining the award of
punitive and compensatory damages is not unconstitutionally excessive. Such an
award is necessary in order to deter AMTI from future conduct of the kind engaged
in here.
{¶ 127} AMTI’s fifth assignment of error is overruled, as is ITC’s second
cross-assignment of error.
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V
{¶ 128} AMTI’s sixth assignment of error is as follows:
{¶ 129} “IF THE PUNITIVE DAMAGES AWARD IS NOT REMITTED, THEN
THE TRIAL COURT ABUSED ITS DISCRETION IN AWARDING ITC
$2,941,502.31 IN ATTORNEYS’ FEES AND COSTS.”
{¶ 130} In its final assignment, AMTI argues that the trial court abused its
discretion when it awarded ITC’s counsel $2,941,502.31 in attorneys’ fees because
the prior punitive damages award of $5,832,974.34 was sufficient to compensate
ITC for its attorneys’ fees and serve as a deterrent to any future tortious conduct.
{¶ 131} We review the trial court’s decision to award attorney fees under an
abuse of discretion standard. Bittner v. Tri-County Toyota, Inc. (1991), 58 Ohio
St.3d 143, 146. “When awarding reasonable attorney fees pursuant to R.C.
1345.09(F)(2), the trial court should first calculate the number of hours reasonably
expended on the case times an hourly fee, and then may modify that calculation by
application of the factors listed in DR 2-106(B).” Id. at 145. Furthermore, “[i]t is
well settled that where a court is empowered to award attorney fees by statute, the
amount of such fees is within the sound discretion of the trial court. Unless the
amount of fees determined is so high or so low as to shock the conscience, an
appellate court will not interfere.” Id. at 146.
{¶ 132} In support of its argument, AMTI relies on Toole v. Cooke (May, 6,
1999), Franklin App. No. 98AP-486 (abrogated on other grounds), wherein the
Tenth District Court of Appeals affirmed the trial court’s decision refusing to award
attorneys’ fees notwithstanding the jury’s verdict in favor of such an award.
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Specifically, the court of appeals observed that the punitive damages award was
$250,000.00 and constituted more than half of the plaintiff’s total verdict amount. Id.
Accordingly, the court held that the punitive damages would compensate the
plaintiff for her attorneys’ fees and have the appropriate deterrent effect on the
defendants. Id.
{¶ 133} Contrary to AMTI’s assertion, while the Ohio Supreme Court has
stated that an award of punitive damages is grounds for an award of attorneys’
fees, it did not state that it is a substitute for such an award. Am. Chem. Soc. v.
Leadscope, 2010-Ohio-2725, at ¶ 86; citing Galmish v. Cicchini, 90 Ohio St.3d 22,
35, 2000-Ohio-7. In Leadscope, a recent case from the Tenth District, the court of
appeals affirmed an award of $7,900,000.00 in attorneys’ fees, despite the fact that
$26,500,000.00 had already been awarded in compensatory and punitive damages.
Id. at ¶ 10, 11.
{¶ 134} After a lengthy hearing on attorneys’ fees and pre-judgment interest,
the trial court found that ITC’s counsel submitted $2,529,011.25 in attorneys’ fees
in connection with the time expended on the case after AMTI was named a
defendant in the case on May 23, 2003. The trial court also found that ITC’s
counsel was entitled to $412,491.06 in costs associated with the litigation. Upon
review, the trial court held that the fees and costs presented by ITC’s counsel were
reasonable in light of the duration and complexity of the litigation. The trial court
noted that the case involved several complex legal issues “which required extensive
discovery, analysis, and skilled attorneys to accomplish the same.” Most
importantly, the trial court held that AMTI failed to rebut the presumption that an
46
award of attorneys’ fees was required to compensate ITC and deter AMTI. As
previously noted, AMTI’s conduct was particularly egregious, a fact of which the trial
court was clearly cognizant. After a thorough review of the record, we conclude
that the trial court did not abuse its discretion by awarding attorneys’ fees in the
instant case.
{¶ 135} AMTI’s sixth assignment of error is overruled.
VI
{¶ 136} All of AMTI’s and ITC’s assignments and cross-assignments of error
having been overruled, the judgment of the trial court is affirmed.
..........
GRADY, P.J. and FAIN, J., concur.
Copies mailed to:
James A. Dyer
Michael P. Moloney
Heather Duffey Welbaum
Catharine D. Kidd
Brian S. Sullivan
David C. Greer
Hon. Mary L. Wiseman