Steves and Sons, Inc. v. Jeld-Wen, Inc., No. 3:2016cv00545 - Document 1779 (E.D. Va. 2018)
Court Description: MEMORANDUM OPINION. It is so ORDERED. Signed by District Judge Robert E. Payne on 10/04/2018. (walk, )
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Steves and Sons, Inc. v. Jeld-Wen, Inc. Doc. 1779 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Richmond Division OCT - Ll 2018 STEVES AND SONS, INC., CLERK. U.S. DISTRICT COURT RICHMOND VA Plaintiff, v. Civil Action No. 3:16cv545 JELD-WEN, INC., Defendant. MEMORANDUM OPINION This matter is before the Court on COUNTERCLAIM DEFENDANTS STEVES AND SONS, INC., AND EDWARD STEVES AND SAM STEVES' RENEWED MOTION FOR JUDGMENT AS A MATTER OF LAW AGAINST JELD-WEN, (ECF No. 1627), and INTERVENOR JOHN G. PIERCE'S RENEWED MOTION FOR JUDGMENT AS A MATTER OF LAW AGAINST JELD-WEN, 1629) INC. INC. (ECF No. ( "the Renewed Motions"). 1 These motions are addressed to the trade secret counterclaims brought by JELD-WEN, WEN") . For the reasons set forth below, Inc. ("JELD- COUNTERCLAIM DEFENDANTS 1 Both motions incorporate by reference the papers filed in support of: (1) the motions for judgment as a matter of law filed by Edward Steves and Sam Steves ( "the Steves Brothers") and by John Pierce ("Pierce"; with the Steves Brothers, ''the Intervenors") before trial began, ECF Nos. 1522, 1524; and ( 2) the motions for judgment as a matter of law filed by Steves and Sons, Inc. ("Steves"; with the Intervenors, "the Counterclaim Defendants") and the Steves Brothers, and by Pierce, after the close of evidence, ECF Nos. 1571, 1576. Consequently, those earlier motions will be denied as moot. Dockets.Justia.com STEVES AND SONS, INC., AND EDWARD STEVES AND SAM STEVES' RENEWED MOTION FOR JUDGMENT AS A MATTER OF LAW AGAINST JELD-WEN, INC. (ECF No. 1627) will be granted in part and denied in part; and INTERVENOR JOHN G. PIERCE'S RENEWED MOTION FOR JUDGMENT AS A MATTER OF LAW AGAINST JELD-WEN, INC. (ECF No. 1629) will be granted in part and denied in part. A. PROCEDURAL STATUS OF MOTIONS Before addressing the motions, an irregularity in each of them. DEFENDANTS STEVES' STEVES AND SONS, it is necessary to sort out The movants in COUNTERCLAIM INC. , AND EDWARD STEVES AND SAM RENEWED MOTION FOR JUDGMENT AS A MATTER OF LAW AGAINST JELD-WEN, INC. (ECF ("Steves") and Sam Steves and Edward Steves. INTERVENOR JOHN G. No. 1627) are Steves and Sons, Inc. The movant in PIERCE'S RENEWED MOTION FOR JUDGMENT AS A MATTER OF LAW AGAINST JELD-WEN, INC. (ECF No. 1629) is John G. Pierce. Both motions (ECF Nos. 1627 and 1629) secrets counterclaims filed by JELD-WEN. defendant named in JELD-WEN's counterclaims. relate to trade Steves was the only Sam Steves, Edward Steves and John G. Pierce later intervened as defendants to the counterclaims. Those three individuals will be referred to as the "Intervenors." 2 Both motions (ECF Nos. 1627 and 1629) seek judgment on the theory that JELD-WEN' s damages case was inadequate as a matter of law. However, Intervenors, because no damages were assessed against the the only defendant that can get relief under that theory is Steves. Thus, the Intervenors are not implicated in JELD-WEN' s damage award and cannot attack it. the Intervenors G. In both motions, (Sam and Edward Steves in ECF No. 1627 and John Pierce in ECF No. 1629) seek judgment because JELD-WEN did not pursue the counterclaims against them. B. SUMMARY OF FACTUAL AND PROCEDURAL BACKGROUND The factual and procedural background dispute has been addressed in detail summary judgment opinions. in the this Court's previous See First Summary Judgment Op. No. 1424) at 2-16; Second Summary Judgment Op. 2-3. Thus, underlying (ECF (ECF No. 1581) at it is necessary only to provide a brief outline for context. Steves is an independent manufacturer of interior molded doors, and it relies primarily on JELD-WEN to supply it with the deerskins needed to make the doors. To that end, the parties entered into a long-term deerskin supply agreement in 2012 ("the Supply Agreement"). First Summary Judgment Op. at 2. In 2016, Steves filed an action against JELD-WEN, alleging a federal antitrust claim, breach of contract claims and other 3 During discovery in that action, claims. evidence that, in 2015 and 2016, Steves, JELD-WEN discovered through Sam and Edward Steves, worked with Pierce and John Ambruz-both former JELD-WEN employees-to obtain information from JELD-WEN Steves: that would help (1) to verify the accuracy of JELD-WEN's key input costs for doorskins that it manufactured, required JELD-WEN to provide doorskin manufacturing plant. evidence, JELD-WEN asserted which the Supply Agreement to Steves; See id. and at counterclaims (2} 3- 7. to develop a Based on against Steves that for, inter alia, misappropriation of trade secrets under the federal Defend Trade Secrets Act ( "DTSA") Secrets Act ("TUTSA"). Id. at 8. and the Texas Uniform Trade Steves' antitrust and contract claims were tried to a jury in January 2018. JELD-WEN' s trade secret counterclaims were tried to a jury in May 2018. C. THE RECORD RELATED TO THE DAMAGES ISSUE ASSESSED BY STEVES In its counterclaims, JELD-WEN sought damages for the alleged trade secret misappropriation. 2 The request for damages was based on the testimony of JELD-WEN' s Jarosz damages expert, John ("Jarosz") , who calculated damages under three different 2 JELD-WEN also sought injunctive relief. The request for injunctive relief is the subject of COUNTERCLAIMANT JELD-WEN, INC. ' S MOTION FOR PERMANENT INJUNCTION AGAINST COUNTERDEFENDANT STEVES & SONS, INC. (ECF No. 1631) in which further briefing has been scheduled. That issue is not addressed in this Memorandum Opinion. 4 scenarios. The first two measured: (1) unjust enrichment damages based on Steves' use of certain process-related trade secrets to achieve reduced costs hypothetical doorskin enrichment damages trade secrets JELD-WEN or for manufacturing doorskins plant ( "Scenario based on Steves' in negotiations other doorskin for One"); use of in and its own unjust (2) certain financial lower doorskin prices with suppliers ("Scenario Two"). See Second Summary Judgment Op. at 8-9; May 4 Trial Tr. at 1423:111424:19. The third scenario computed reasonable royalty damages by combining two quantitative methods, approach and the licensing the incremental benefits comparables Three") . See Second Summary Judgment Op. approach at 9-11; ( "Scenario May 4 Trial Tr. at 1426:2-24, 1449:6-17. At trial, the jury was presented with a list of sixty-seven alleged trade secrets that JELD-WEN claimed to have been misappropriated. Jarosz testified that Scenario One was based on his quantification of the benefits provided by the misappropriation of trade secrets 4, 26, 27, and 47. May 4 Trial Tr. at 1432:17-1433-9. Of those four alleged trade secrets, only alleged trade secret 4 7 was found to be trade secrets by the jury. Jarosz testified that Scenario Two was based on the benefits derived from trade secrets 36 to 38 and 44 to 52, id. at 1437:13-1438:3. Of those thirteen alleged trade secrets, only 5 alleged trade secrets 46 and 47 were found by the jury to be a trade secret. Scenario Three, construction of a contrast, in reflected hypothetical negotiation between Steves and JELD-WEN for Steves' use of all of the trade secrets asserted. See id. at 1448:3-1449:5. According to Jarosz, ranges under Jarosz's the incremental the royalty rate benefits approach-which incorporated Scenario One and Two's figures-were 2. 8 %' to 13 . 4 %' and 4.6%' to 6%', then compared negotiated respectively. See id. at 1449:20-1450:8. Jarosz the in hypothetical this case to license other that licenses would for have the been use of intellectual property ("IP") , which had a royalty rate range of 2.5% to 10%'. See id. at 1451:6-1454:18. He testified that a royalty rate under those comparable licenses would not "change[] with the size of the portfolio of IP"; that is, it would "stay[] the same" even " [i) f the portfolio got larger or smaller," because "what was being paid was access to a business. And it didn't matter precisely what the components of the IP . . . were." Id. at 1455:1-10. Judging those ranges in light of certain qualitative factors, Jarosz determined that the "correct" royalty rate for the hypothetical negotiation here was 3%. See id. at 1455:18-1461:4. He then multiplied that rate by the assumed selling price of doorskins manufactured by Steves with the license and the volume of production over a ten-year 6 period, and discounted the result to present value, yielding a lump-sum reasonable royalty of $9.9 million. Id. at 1461:5-11. After considering the evidence, the jury determined that only eight of the sixty-seven alleged trade secrets 23, 31, 46, 47, and 59) (Nos. 9, 10, 11, constituted trade secrets. See Verdict Form (ECF No. 1609). It then concluded that, for the DTSA claim, seven trade secrets and that such malicious. See determined that (all except 59) misappropriation id. at 6-7, JELD-WEN was 14, was had been misappropriated, 18, neither 27, entitled 34. to an willful Then, award nor the jury of $1.2 million as a reasonable royalty for those eight secrets. Id. at 40. The only difference as to the TUTSA claim was the finding that trade secret 59 had been misappropriated jury's (but neither willfully nor maliciously). See id. at 46-47, 54, 58-59, 67-68, 74-75. As a result, the jury's TUTSA and DTSA reasonable royalty awards were identical. See id. at 80. D. THE MOTIONS FOR JUDGMENT AS A MATTER OF LAW FILED BY STEVES AND THE INTERVENORS Steves and the Intervenors all moved for judgment as a matter of law before the case was submitted to the jury. See Fed. R. Civ. P. motions, SO {a) (2). which However, presented the Court several did disputed not rule issues on those that were eliminated or materially affected by the jury's verdict. Because the Counterclaim Defendants have now timely filed the Renewed 7 Motions, the Court must rule on those motions earlier ones. See Fed. R. Ci v. P. SO The Renewed Motions {b) . rest entirely on the same two arguments. Bros. Mem. Brothers (ECF No. do [original] not 1628) renew at any 1 n.2 other instead of the See Steves ("Steves and argument Rule so (a) motions."); Pierce Mem. made & Steves the Steves in their (ECF No. 1630) at 1 n. 2 (same) . First, the Intervenors assert that they should be granted judgment as a matter of law because JELD-WEN did not amend the counterclaims to seek judgment against them; JELD-WEN did not identify in the Final Pretrial Order any triable issues as to them; and JELD-WEN did not judgment against them. tender damage damages calculations, collectively, verdict form requesting This theory does not implicate Steves. Second, Steves argues that, the a because under Scenario Three of Jarosz based on determined the reasonable existence of royalty sixty-seven trade secrets, and because the jury found that only eight of the alleged sixty-seven trade secrets were misappropriated, Jarosz's collective valuation did not provide an adequate basis to determine a reasonable royalty for the only eight trade secrets as to which a damage award could be made. As explained above, the theory is not available to the Intervenors even though they have advanced it as an alternative matter of law. 8 basis for judgment as a DISCUSSION I. Legal Standard A court may grant judgment as a matter of law against a party on a claim if the party "has been fully heard on an issue" at trial and "the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue," assuming that a "favorable finding on that issue" is necessary for the party to prevail on the claim. Fed. R. Civ. P. 50{a){l). Thus, "[j)udgment as a matter of law 'is properly granted if the nonmoving party failed to make a showing on an essential element of his case with respect to which he had the burden of proof. '" Inc., 763 F.3d 385, Russell v. 391 (4th Cir. Wicomico Cty., 390 F.3d 328, 332 Absolute Collection Servs. , 2014) (quoting Wheatley v. (4th Cir. 2004)). However, the court must "view[] the evidence in a light most favorable to the non-moving draw[] party (and every legitimate judgment as a matter in support inference of law is of the jury's verdict) and favor," and "the only in that party's proper only if conclusion a reasonable jury could have reached is one in favor of the moving party." City, 475 F.3d 214, 218 Int' 1 Ground Transp. (4th Cir. 2007). v. Mayor of Ocean Judgment as a matter of law may be entered on "purely legal issues unrelated to the sufficiency Practice, of the § 50.05[3] evidence at trial." 9 Moore's Federal (Matthew Bender 3d Ed.); K&T Enters., 9 Inc. v. Zurich Ins. Co., 97 F.3d 171, 175 (6th Cir. 1996}; Chesapeake Paper Prod. Co. v. Stone & Webster Eng'g Corp., 51 F.3d 1229, 1236 (4th Cir. 1995}. II. Claims Against Intervenors: Consequences of Intervention The Intervenors contend that judgment as a matter of law must be entered in their favor on the DTSA and TUTSA claims 3 because JELD-WEN did not any triable issues as identify in the to them; Final Pretrial Order and JELD-WEN did not tender a verdict form requesting judgment against them. This contention requires a close look at the history of the case, an examination of the Intervenors' involvement in this action, and the legal principles that apply to intervention. The case began when Steves filed claims against JELD-WEN for violation of the Clayton Act, several other relief. 4 WEN found claims, as well as for breach of contract, a request for and declaratory During discovery in the case brought by Steves, JELDevidence that Steves, Edward and Sam Steves, and 3 Sam and Edward Steves also intervened as Counterclaim Defendants to JELD-WEN's tortious interference counterclaims, see ECF No. 833 at 6. The Court granted summary judgment on those counterclaims as against Steves, ECF No. 1290, eliminating any interest Sam and Edward Steves may have had in those counterclaims. 4 Except for the antitrust claims, the claims for breach of contract, and the request for declaratory relief, all other claims made by Steves have been removed from the case for various reasons not here pertinent. 10 Pierce had misappropriated some of JELD-WEN trade secrets. JELD-WEN filed the trade secrets Counterclaim. 5 So The only named Counterclaim Defendant was Steves even though the text of the Counterclaims named misappropriating culpable Sam and Edward Steves and individuals conduct in great and outlined detail. In Pierce their fact, as the allegedly without the allegations pertaining to the conduct of Sam and Edward Steves and Pierce, the trade secrets counterclaims would not have been viable or plausible. Steves sought transfer of the Counterclaims to Texas where all defendants were amenable to in personam jurisdiction. WEN opposed transfer. JELD- The Court agreed with JELD-WEN and kept the Counterclaims in this Court (ECF No. 240). However, after JELD-WEN received some adverse rulings in this Court, it filed a case in Texas alleging the same trade secrets violations that were asserted "Texas Case") . JELD-WEN moved in JELD-WEN's Then, in Counterclaims furtherance voluntarily to Counterclaims in this case with a Case. Because this case was of in its dismiss this forum its case (the shopping, trade secret view to pursuing the Texas already set for trial, Steves opposed that motion and the Court denied it (ECF No. 579). 5 JELD-WEN's other counterclaims were dismissed for reasons not relevant here. 11 The Intervenors moved to November 2017, after the intervene Court had denied voluntarily to dismiss its Counterclaims. the Court granted the in this Intervenors' case in late JELD-WEN's motion On January 18, motions to 2018, intervene and required the Intervenors to file answers to the Counterclaims. Also, JELD-WEN was allowed to amend its Counterclaims by January 31. ECF their No. 832. answers, Although ECF Nos. the Intervenors 837-38, JELD-WEN immediately never filed amended its Counterclaims. And, aside from an issue that was resolved at the beginning of trial identify in the by a Final motion to though factual identified liability and cited extensively the conduct of identified factual JELD-WEN did not Pretrial Order any triable specifically pertained its limine, 6 in contentions of legal the and the issues that Intervenors, even issues as Intervenors. triable issues to Steves Indeed, related all to Steves. See ECF No. 1586-11 at 2-3; ECF No. 1586-12 at 3-4. Based on the fact that JELD-WEN had identified no triable issues against matter of them, the Intervenors moved for law immediately before 6 trial began. judgment as a Those motions JELD-WEN posed as a triable issue "[w] hether John Pierce spoliated relevant evidence when he had a duty to preserve evidence because he reasonably expected future litigation. 11 ECF No. 1586-11 at 3. However, the Court denied JELD-WEN's motion for spoliation sanctions, see ECF No. 1536, and JELD-WEN did not raise the issue at trial. 12 came on the eve of trial and they were not decided before trial Thus, began. the Intervenors participated prejudice to their request for such relief. at trial without See ECF Nos. 1522, 1524; Apr. 30 Trial Tr. at 126:24-127:14. At trial, virtually all of the evidence presented by JELDWEN about the misappropriation of its alleged trade secrets was about the conduct of, Steves and Pierce. 7 trade secret and actions taken by, Edward and Sam JELD-WEN could not have prevailed on any misappropriation without that proof because, according to JELD-WEN, the conduct of the Intervenors was at the core of the misappropriation. When, after the evidence was in, it came time to tender jury instructions and a proposed verdict form so that parties, the JELD-WEN liability of the jury could render offered no Intervenors judgment against culpable instructions and pertaining JELD-WEN's to the proposed verdict form did not call upon the jury to find the Intervenors liable. The Intervenors contended then, and reiterate now, that judgment as a matter of law is appropriate because JELD-WEN did not amend Intervenors; its Counterclaims to seek relief against the that JELD-WEN did not identify any triable issues 7 There was some testimony attributing some misappropriation to John Ambruz, a non-party here, but a party in the Texas case. 13 against the Intervenors; 8 that JELD-WEN did not attempt to modify the Final Pretrial Order to do so even though this allegedly fatal omission had been brought to their attention; WEN tendered neither instruction nor a proposed verdict that would allow for a finding of liability; agreed to a trade verdict secrets form that allowed the Counterclaims without Intervenors. See Fed. R. Civ. P. that JELDform and that JELD-WEN resolution of judgment against its the (16) (e). JELD-WEN's response is simple. It plainly concedes that it never amended its Counterclaims nor raised any triable issues against, nor sought judgment against, the Intervenors. However, JELD-WEN argues that this reality makes judgment as a matter of law text, entirely inappropriate only permits because judgment as a that a party has asserted. Fed. says has JELD-WEN, Intervenors, because it Rule SO (a), matter of R. Civ. P. alleged no by its plain law on "claim[s]" S0(a) (1) (B). claims Then, against the there is simply nothing on which the Court could enter judgment. These principles arguments applicable must to be viewed against intervention. First, that "an intervenor must generally 8 several it is basic settled 'take the case as he finds The Intervenors correctly point out that such failures normally operate as a waiver of a party's right to have the omitted issue tried. See McLean Contracting Co. v. Waterman Steamship Corp., 277 F.3d 477, 480 (4th Cir. 2002). 14 it. ' " Liberty Mut. Fire Ins. , 314 F. R. D. at 18 7 ( quoting Newport News Shipbuilding intervenors Drydock, & "cannot change 646 the F.2d issues at 122) framed and that between the original parties, and must join subject to the proceedings that have occurred prior to [their] intervention." Wright & Miller, supra, § 1920 (internal quotations omitted). Second, there Intervenors are litigation. And, that posture, is no dispute that, (Counterclaim parties that status carries the Intervenors can, circumstances: 2016); Newport appeal News Shipbuilders' demand a Ass'n, trial Plank, the to the consequences because, see Liberty Mut. Inc., 314 F.R.D. 180, 187 646 on Drydock & F.2d any 117, legal 133 F.R.D. in depending on the particular Fire (E.D. judgments that may be adverse to them, Shipbuilding jury Campbell v. Defendants) participate in discovery, Ins. Co. v. Lumber Liquidators, Va. having intervened, 175, 123 Co. v. (4th Cir. issues 176 (D. see Peninsula 1981); they present, Kan. 1990) or see (citing Ross v. Bernard, 396 U.S. 531, 541 n.15 (1970)). Third, it is settled that, "[u] nless conditions have been imposed, the intervenor is treated as if the intervenor were an original party." 7C Charles Alan Wright Federal Practice and Procedure League of United Latin Am. § 1920 Citizens v. & Arthur (3d ed. Wilson, R. 1998); Miller, see also 131 F. 3d 1297, 1304 (9th Cir. 1997); Alvarado v. J.C. Penney Co., 997 F.2d 803, 15 805 (10th Cir. 1993); Brown v. Demeo, Inc., 792 F.2d 478, 480-81 (5th Cir. 1986); Schneider v. Dumbarton Developers, Inc., 767 F.2d 1007, 1017 (D.C. Cir. 1985) . 9 The only conditions imposed on intervention were that the trial would not be postponed and the Intervenors could not ECF No. 833). There (Memorandum Opinion, reopen discovery. were no conditions that would limit the Intervenors' exposure to liability on the trade secret claims. Fourth, intervention intervenors can "litigate fully on the merits once has recognized that, make[] been granted." Id. Similarly, courts have " [b] y successfully intervening, . part [ies] to complete [them] sel [ves] adjudication . . . of the vulnerable issues 9 in litigation between the It is worth noting that almost all of the cases cited by Wright and Miller in support of that general proposition concerned intervention as of right, not permissive intervention. See Wilson, 131 F.3d at 1302; Alvarado, 997 F.2d at 804; Schneid~ 767 F.2d at 1017; District of Columbia v. Merit Sys. Prot. Bd., 762 F.2d 129, 132 (D.C. Cir. 1985); Donovan v. Oil, Chem., & Atomic Workers Int'l Union & Its Local 4-23, 718 F.2d 1341, 1350 (5th Cir. 1983); United States v. Oregon, 657 F. 2d 1009, 1014 (9th Cir. 1981); Campbell, 133 F.R.D. at 176; Sec. Indus. Ass'n v. Bd. of Governors of Fed. Reserve Sys., 628 F. Supp. 1438, 1440 (D.D.C. 1986). This makes sense, because the stricter requirements of Rule 24 (a) show that intervenors as of right usually have a more substantial interest at stake than permissive intervenors. However, other courts have extended the principle to permissive intervention, and neither Rule 24 nor Wright and Miller distinguish between the rights of mandatory and permissive intervenors. See Ecee, Inc. v. Fed. Energy Regulatory Comm'n, 645 F.2d 339, 351 (5th Cir. 1981); Conseco v. Wells Fargo Fin. Leasing, Inc., 204 F. Supp. 2d 1186, 1193 (S.D. Iowa 2002). Thus, the Court will assume for the sake of the Intervenors' argument that this broad statement applies here. 16 intervenor and the adverse party." Merit Sys., 762 F.2d at 132 (emphasis held added). Likewise, intervenor-defendants file it has answers been or motions, that, or if otherwise participate in a case, plaintiffs can seek to hold them liable in the same way as normal the defendants, complaint plaintiff amends Schneider, 767 F.2d at 1017 ("As an intervenor, subjected itself plaintiff's [original] defendant, to the to whether notwithstanding seek such "filed a not the relief. See the defendant claims against plaintiff's amend his complaint to include reference to (emphasis added); Merit Sys., or the failure to [the intervenor] . ") 762 F.2d at 132 (where intervenor substantial motion to dismiss and assumed an active role in defending his interests in the underlying controversy," plaintiff could "obtain relief against the intervenor-defendant even if the original defendant [wa]s lawsuit"} ; Ctr. for Envtl. Sci. Accuracy Park Serv., No. 114CV02063LJOMJS, Cal. Aug. 29, 2016) (plaintiffs' in an amended complaint where added) . intervenor Indeed, filed that of . . . intervention" Reliability v. Nat' 1 "failure to name [intervenor] to plaintiffs' addressing exposure as a defendant. 17 the at *9 potential 132 (emphasis added). & from 2016 WL 4524758, [w] as not fatal" answer eliminated claim) is Merit Sys., (E.D. claim (emphasis "the 'price' 762 F. 2d at resolution can intervenor-defendants Finally, of certain manufacturers issues. intervened as In also force the for example, two Alvarado, defendants to disclaim liability to both the plaintiff and their co-defendant, could possibly manufacturers assert in the an indemnification future. The claim court af finned their which against the the grant of summary judgment in favor of the manufacturers as against the plaintiff and co-defendant, even though the co-defendant had not asserted any claim against the manufacturers, reasoning that the manufacturers had clearly parties . See Al varado, raised adverse issues against both 9 9 7 F . 2d at 8 o5 ( " [W] here the intervenor claims an interest adverse to both plaintiff and defendant he or she is entitled to have the issues raised thereby tried and determined." (internal quotations omitted)). The Intervenors argue that they are in the same position as the intervenor-defendants Systems, in Alvarado, and Merit but they are not in exactly the same posture as the intervenor-defendants in those cases. Systems, Schneider, In Schneider and Merit the plaintiffs made concerted efforts to assert their claims or obtain a judgment against the intervenor-defendants, who were trying to use their position as intervenors to avoid liability. name the Here, JELD-WEN did not amend its Counterclaims to Intervenors as defendants or to seek relief against them. 18 Alvarado is not on point either. Once the manufacturers in that case intervened, they could "make their claims known" the other parties. Alvarado, to 997 F.2d at 805. Through an answer and a motion for summary judgment, "the manufacturers did just that, requesting a declaratory judgment of sorts to resolve the ultimate issue [in the case] as a basis for liability." Id. That was not what happened here. However, the Intervenors' motion is not disposed of because it differs from Alvarado, Schneider, and Merit Systems in those ways. The critical principle here is that JELD-WEN, in its Counterclaims and in its evidence at trial, made this case about the conduct of the Intervenors. the intervention, In so doing and by virtue of the Intervenors were exposed to judgment even though JELD-WEN failed to amend the counterclaim to specifically name them as defendants. Envtl. Sci. Accuracy intervention. This & Schneider, 767 F.2d at 1017; Ctr. for Reliability, at *9. That is the price of Merit Sys., 762 F.3d at 132. case is governed intervention is allowed, by the principle liability Counterclaims) on even the if plaintiff's the complaint claims or the plaintiff (counterclaim plaintiff) 19 it is exposed (here JELD-WEN' s counterclaim amended to name the intervenor as a defendant. so, once the Intervenor is a full party to the case and once a party intervenes as a defendant, to that, is not Because that is is able to recover from the Intervenor if the claim is proven by evidence and the jury is asked to return a verdict against the intervening defendant. The consequences of failing to identify a triable issue, or to seek a verdict, against the Intervenors rests on JELD-WEN. That is because, by virtue of the intervention, the claims are asserted against the Intervenors by operation of law. the teaching of Schneider and Merit Systems. The That is failure of JELD-WEN to comply with Rule 16(e} or to ask the jury to assess liability operates to relieve the Intervenors of liability just as would be the case if the plaintiff had identified no triable issues, or had not sought judgment, against a named defendant. JELD-WEN Counterclaims asserts to that include it the did not need Intervenors Defendants under the principles that: ( 1) to as amend its Counterclaim the Intervenors must take the case as they find it; and (2) JELD-WEN is master of its claims. But that theory elevates form over substance and it puts more weight on those two precepts than they can carry. It is true that, here, the Intervenors found a counterclaim that did not name counterclaim detail, that them as defendants, charged them, but they also found a specifically and in graphic with committing the acts of misappropriation that were the gravamen of the Counterclaims. The Intervenors asked to intervene so that they could defend against those charges. 20 They were allowed to do that. And, thereafter, they participated in the pretrial and trial proceedings. the law, in so doing, they exposed themselves to both the DTSA and the TUTSA claims. fully And, under judgment on Having done that, they are now told by JELD-WEN that their effort was for naught because you must take the case as you find it and we are the masters of our Counterclaims. That position actually sets at naught the legal system that allows intervention of the decision allowing intervention, all of the other principles that apply when and intervention is allowed. If accepted, that position would result in the waste of judicial resources litigation. For and sanction example, under the needless JELD-WEN's duplication "mastery pleading" and "take the case as you find it" theory, of of its JELD-WEN can litigate against the Intervenors in the Texas Case the exact same misappropriation of all found not to be trade the secrets. adopting JELD-WEN's theories here. another multi-week trial jury heard here. And, trade secrets That is That, involving the the that the jury consequence of of course, would mean same evidence that the it would give JELD-WEN another bite at the apple as to the alleged trade secrets that the jury in this case found not to be trade secrets at all. 21 It is, of course, possible that a estoppel could {and should) Case . But, this case, finding of collateral foreclose that result in the Texas because this matter has been dee ided by a jury in there is no warrant to subject the parties, or the courts, to any further trial preparation or trial on issues that were fully tried and decided in this case. Moreover, a second trial is not legally appropriate because Sam and Edward Steves and Pierce intervened in this case as defendants, participated in the trial in which their conduct was the linchpin of the case against Steves, and, by operation of law, exposed themselves to judgment on JELD-WEN's DTSA and TUTSA claims, and JELD-WEN chose not to ask the jury to adjudicate the claims. That, of course, is the consequence of JELD-WEN's own decision not to add the Intervenors as Counterclaim Defendants, not to identify any triable issues against them, and not to ask the jury to find them liable and award damages against them. Those record, were deliberate choices made by JELD-WEN. Under this JELD-WEN must bear the consequences of its choices and the Intervenors are entitled to judgment as a matter of law on the DTSA and the TUTSA counterclaims. 22 III. The Attack on DTSA and TUTSA Damages Award Against Steves and Sons, Inc . 10 JELD-WEN showing the satisfies '' its burden misappropriation," and of "the proving damages subsequent by commercial use," and by "introduc[ing] evidence by which the jury can value the rights the defendant has obtained." Univ. Lykes-Youngstown Corp., 504 F.2d 518, 545 Computing Co. {5th Cir. v. 1974); see also sw. Energy Prod. Co. v. Berry-Helfand, 491 S.W.3d 699, 71112 (Tex. 2016) ( "The fact finder must have sufficient evidence to determine the value a reasonably prudent investor would pay for the trade secret, and to meet that standard, the plaintiff need only demonstrate the extent of damages as a matter of just and reasonable approximation." Thus, inference, {internal even if citations to obtain judgment as a the and matter of extent is quotations only an omitted)). law on the DTSA and TUTSA reasonable royalty claims, Steves must show that JELD-WEN did not provide sufficient evidence for the jury to reach its $1.2 million award for reasonable royalty. Steves' the trade assertions about Jarosz' s secrets essentially collective valuation of restate Steves' corresponding argument in its motion for summary judgment. Notwithstanding the decision denying summary judgment 10 on that basis, Steves Because the motions for judgment as a matter of law will be granted in favor of the Intervenors, this issue now pertains only to Steves. 23 reiterates that Scenario Three should not have been presented to the jury because Jarosz calculated those damages while including sixteen alleged trade secrets that JELD-WEN later chose not to assert as trade secrets. Moreover, says Steves, the concerns raised at the summary judgment stage are heightened here because the jury found that only eight trade secrets were misappropriated-far fewer than the sixty-seven on which Jarosz based his figures. Before addressing these contentions, consider whether Steves waived the Court must first any collective valuation challenge by failing to raise it in their original Rule so (a} motions. JELD-WEN is correct that, generally, "[a] post-trial motion for judgment can be granted only on grounds advanced in the pre-verdict motion." Fed. R. Civ. so (b} P. advisory committee's note to 1991 amendment; see also Nichols v. Ashland Hosp. SO(b} Corp., 251 F.3d 496, motion previously However, made the liberally," "provide[] may only on be the the made same specificity and 501 n.1 (4th Cir. as a grounds requirement earlier Rule 2001} renewal of (" [A] a Rule motion under Rule so (a}."} . should be "construed SO(a} motion need only the court and the nonmoving party sufficient notice of any alleged deficiencies in evidence." Liberty Mut. Fire Ins. Co. v. JT Walker Indus., Inc., 2014} Dungan, (citing Singer v. 554 F. App'x 176, 185 24 45 F.3d 823, 829 (4th Cir. (4th Cir. 1995)) . Here, failed Steves initially argued that both damages claims because "Jarosz' s Scenario Three modeled aggregate damages based on alleged trade secrets no longer at issue in the case by the time of trial, thus his testimony gives the jury no basis for determining damages with respect to the alleged trade secrets actually at issue in the trial." ECF No. 1572 at 6; see also ECF No. 1576 at 1 {adopting arguments for Pierce). They did not elaborate on this briefs that supporting Steves' did so. citations assertion, Although gave but cited cursory, JELD-WEN to multiple other this enough statement notice to and preserve collective valuation argument for their subsequent Rule 50{b) motions. See Liberty Mut. Fire Ins., 554 F. App'x at 185 & n.5. Nonetheless, is persuasive. neither argument First, about Jarosz' s calculations to the extent that Steves is asking the Court to reconsider its previous denial of summary judgment on JELD-WEN' s damages motion for claims, that request has no foundation. "A reconsideration is appropriate where the Court has patently misunderstood a party, has made a decision outside the adversarial issues presented to the Court by the parties, or has made an error not of reasoning but of apprehension. " Paasch v. Nat'l Rural Elec. Coop. Ass'n, No. 115CV01638GBLMSN, 10519130, at *2 {E.D. Va. May 27, 2016) Inc. v. Mel Bohannan Roofing, Inc., 25 2016 WL (citing Above the Belt, 99 F.R.D. 99, 101 (E.D. Va. 1983)). But motions that simply "ask[] a court to 'rethink what the Court had already thought through-rightly or wrongly' should not be granted." TomTom, 545, 546 (E.D. Va. Inc. v. AOT Sys. GmbH, 17 F. Supp. 3d 2014) (quoting Above the Belt, 99 F.R.D. at 101). After the Court entered an order denying summary judgment, ECF No. 1536, it issued an opinion that discussed and rejected collective Steves' valuation see argument, Second summary Judgment Op. at 42-49. Steves points to no new evidence making that analysis clearly improper, disagree with or the any errors Court's of apprehension. decision, but They complaining about earlier decisions with no new arguments does them no good here. See TomTom, 17 F. Supp. 3d at 546. Second, if Steves believes that the situation here is meaningfully different than on summary judgment because of the lower number of misappropriated Scenario Three, it that removal which JELD-WEN's Jarosz had is mistaken. of relied trade Before trial, sixteen "d[id] secrets alleged not determining the applicable reasonable royalty." Judgment Op. at 46. To rebuttal expert report, not critical to the contrary, as support the Court held trade prevent to the secrets jury on from Second Summary stated in Jarosz' s "the exact number of trade secrets was Scenario Three, as a party paying for an intellectual property license like the theoretical one here is typically paying for access to a field of knowledge, not knowing 26 which IP assets will be most important." Id. marks omitted) . trade secrets At worst raised for JELD-WEN, {internal quotation the removal of "doubts about particular damages those figures [that] should be resolved by the jury, not the Court, as long as Jarosz's . . . testimony gives the jury enough direction" to calculate damages. Id. at 47. Jarosz's trial testimony, by all appearances, gave the jury the necessary direction. calculations Although Jarosz acknowledges that the in Scenarios One and Two were tied to specific misappropriated trade secrets, he testified that the reasonable royalty figure in scenario Three trade discussed secrets" during was the based on "[a] 11 of hypothetical the negotiation. May 4 Trial Tr. at 1449:3-5. He then stated that one analytical framework underlying Scenario Three, the licensing comparables approach, resulted in a broad range of royalty rates, from 2.5% to 10%. In particular, he described a similar license-"perhaps the most useful" comparable license-for the "knowledge and knowhow and experience" related to a product used in particle board and fiberboard, which "commanded a royalty rate of 3 [%'] • " That rate, Jarosz said, would not fluctuate based on the size of the IP portfolio, because the licensee was paying for its "access to a business," 1455: 10. applied not the In addition, to the precise he IP components. explained that negotiation between 27 the JELD-WEN Id. 3% at rate and 1454: 7- that Steves he was further supported by the considered. testified million See that could id. at his be several qualitative factors 1456:23-1460:15. recommended reached by reasonable multiplying that Finally, royalty that Jarosz of rate he by $9.9 the expected sale price and production volume of the doorskins that Steves could manufacture after having acquired that license. See id. at 1460:18-1461:11. Because the incremental Scenarios One and Two, benefits that part of approach incorporated Scenario Three was made unreliable by the jury's conclusion that only four of the trade secrets supporting the quantification in Scenarios One and Two qualified as trade secrets. But, as Jarosz explained, the incremental benefits and licensing comparables approaches merely "[l)ook at the [reasonable royalty] angles." Id. at 1452: 14. Therefore, not have relied fully (or at all) problem from different even though the jury could on the incremental benefits approach in assessing damages for the only eight trade secrets it found to have been proved, have considered Jarosz' s the jury could still reasonably licensing comparables and qualitative approaches to determine a royalty rate here. Furthermore, although Jarosz's $9. 9 million royalty was based on sixty-seven trade secrets, lump-sum and he did not provide the jury with an exact methodology for calculating a royalty fewer if trade secrets 28 were found to have been misappropriated, JELD-WEN was not required to "show damages with absolute precision or certainty." W. L. Gore & GI Dynamics, Inc., 872 F. Supp. 2d 883, 893 unquestionably presented evidence Assocs., (D. Ariz. 2012). It relevant to factors used to evaluate a reasonable royalty: setting of the injury, misappropriation, and the the likely future nature and Inc. v. the general "the commercial consequences of extent of the use the the defendant put the trade secret to after misappropriation." Univ. Computing, 504 F.2d at 538; see also Jury Instructions (ECF No. 1614), Instruction No. consider evidence, in the 36 determining jury misappropriated. million reasonable could based on the number of The (outlining factors have trade made secrets jury appears reasonable royalty misappropriated trade secrets royalty). by to a for the Based common-sense that have it jury to on inference found had been settled on a determining that that the $1. 2 eight represented approximately 11. 94% of the sixty-seven trade secrets underlying Scenario Three, and then multiplying Jarosz's reasonable royalty by that percentage. 11 This calculation obviously assumes that each of the 11 If, as appears to be the case, the jury took this approach, then the damages figure for the DTSA claim should in theory be slightly lower, since the jury found that only seven trade secrets were misappropriated for purposes of that claim. However, given the evidence in the record, the jury might have simply decided that the non-misappropriated trade secret, 59, did not have much value compared to the other misappropriated 29 sixty-seven trade secrets would have a roughly equivalent value for Steves in a hypothetical license negotiation. testimony, combined with the other evidence reasonable royalty assessment, rights [Steves] Although has Steves allowed the obtained" also in introduced that pertinent jury to manner. evidence But Jarosz' s to to the "value the Id. at 545. contest that valuation, the jury was well-equipped to weigh all the evidence before it. As a result, the jury reasonably could have determined JELD-WEN's reasonable royalty damages with sufficient certainty, so that judgment as a matter of law on the DTSA and TUTSA claims will not be granted. 12 CONCLUSION For respect the foregoing reasons and as described herein, to COUNTERCLAIM DEFENDANTS STEVES AND SONS, EDWARD STEVES AND SAM STEVES' INC. , with AND RENEWED MOTION FOR JUDGMENT AS A trade secrets. Whatever the case, the jury's damages approximation. 12 the Court cannot second-guess Steves continues to rely on 02 Micro International Ltd. v. Monolithic Power Systems, Inc., 399 F. Supp. 2d 1064 (N.D. Cal. 2005) and E.I. du Pont de Nemours & Co. v. Kolen Industries, Inc., No. 3:09CV58, 2011 WL 4625760 (E.D. Va. Oct. 3, 2011), but those cases are no more compelling here than they were in the summary judgment context. See Second Summary Judgment Op. at 4849. Although the jury did not rely on the value of "any one group of trade secrets" here, as in 02 Micro International, see 399 F. Supp. 2d at 1078, it properly made a reasonable inference based on Jarosz's collective valuation of the sixty-seven trade secrets and his testimony about the relative value of individual trade secrets in IP licenses. 30 MATTER OF LAW AGAINST JELD-WEN, INC. (ECF No. 1627), judgment as a matter of law will be denied as to Steves' attack on the trade secrets damage award. Judgment as a matter of law on the trade secrets damage award will be denied as moot as to Sam Steves and Edward Steves because no damage award was made as to them and because judgment as favor on account a of matter of law will be granted in their JELD-WEN's failure to pursue PIERCE'S AGAINST RENEWED JELD-WEN, MOTION INC. FOR (ECF JUDGMENT No. 1629) AS on trade INTERVENOR JOHN secret counterclaims to judgment against them. G. the A MATTER the trade OF LAW secrets damage award will be denied as moot as to him because no damage award was made as to him and because motion for judgment as a matter of law will be granted in his favor on account of JELDWEN's failure to pursue the trade secret counterclaims judgment as against him. It is so ORDERED. /s/ Robert E. Payne Senior United States District Judge Richmond, Virginia Date: October 4, 2018 31 to
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