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FMS, Inc. v. Volvo Construction Equipment North America

March 20, 2007

FMS, INC., A MAINE CORPORATION, PLAINTIFF,
v.
VOLVO CONSTRUCTION EQUIPMENT NORTH AMERICA, INC., A DELAWARE CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Charles P. Kocoras, District Judge

MEMORANDUM OPINION

This matter comes before the court on several post-trial motions of the parties. Defendant Volvo Construction Equipment North America, Inc. ("Volvo") moves for judgment as a matter of law or, in the alternative, for a new trial or remittitur.

Plaintiff FMS, Inc. ("FMS") requests prejudgment interest, taxable costs, and attorneys' fees. For the reasons set forth below, Volvo's motion is denied. FMS's motions for prejudgment interest and attorneys' fees are denied. Its motion for taxable costs is granted in part and denied in part.

BACKGROUND

From 1997 to late 1999, Plaintiff FMS, Inc. ("FMS") purchased and sold excavators pursuant to a dealer agreement with Samsung Construction Equipment North America Corp. ("Samsung"). FMS sold these Samsung excavators with attachments, manufactured by other suppliers, designed for use in the forestry industry in Northern Maine. In 1998, Volvo acquired Samsung and assumed its contractual obligations. In 1999, Volvo informed FMS of its decision to discontinue the Samsung excavator line and terminate the dealer agreement. Volvo did not stop making excavators, however; it continued to manufacture an excavator based upon the Samsung platform and to sell those excavators under the Volvo brand through another dealership in Maine.

In 2000, FMS, along with several other former dealers of Samsung excavators, sued Volvo for wrongful termination of their dealer agreements. This Court granted summary judgment in favor of Volvo on all claims. On appeal, the Seventh Circuit reversed our decision in part, holding that the protections of the Maine Franchise Law, 10 Me. Rev. Stat. § 1361 et seq. ("MFL") applied to trump termination provisions in FMS's dealer agreement. Cromeens, Holloman, Sibert, Inc. v. AB Volvo, 349 F.3d 376, 391 (7th Cir. 2003). The MFL provides that a dealer may not terminate a franchise relationship unless it has good cause for the termination.

§1363(C). Good cause for termination exists when the manufacturer discontinues the production or distribution of the franchise goods. § 1363(C)(2)(4). The Seventh Circuit held that a disputed issue of fact existed with respect to whether or not Volvo had "good cause" to terminate FMS's Samsung Dealer Agreement as required by the MFL, and remanded the case for trial. The case was tried to a jury, which returned a $2.1 million verdict in favor of FMS on November 30, 2006. By special verdict form, the jury indicated that it attributed 50 percent of the damages to lost profits from the sales of attachments sold with the Samsung excavators.

Volvo now moves for judgment as a matter or law or, in the alternative, a new trial or remittitur, arguing that (1) the jury's verdict was unsupported by the evidence; (2) the jury was erroneously instructed as to the meaning of the MFL; (3) the testimony of FMS's damages expert concerning FMS's lost profits was unreliable under the Daubert standard and impermissibly speculative; and (4) the amount of the damages award should be reduced by 50 percent because the MFL does not permit recovery for lost sales attributable to goods not manufactured by Volvo.

FMS, as the prevailing party, moves for an award of taxable costs, prejudgment interest on the verdict, and attorneys' fees incurred since the Seventh Circuit remanded the case.

LEGAL STANDARDS

A. Motion for Judgment as a Matter of Law, or in the Alternative, a New Trial or Remittitur

Fed. R. Civ. P. 50(a)(1) and 59(a) supply the guidelines for evaluating Volvo's motion. Federal courts sitting in diversity apply the federal standard to motions for a new trial, remittitur, and judgment as a matter of law, although state law supplies the elements of proof for the substantive legal issues. Kapelanski v. Johnson, 390 F.3d 525, 530 (7th Cir. 2004) (new trial); Lane v. Hardee's Food Systems, Inc., 184 F.3d 705, 707 (7th Cir. 1999) (judgment as a matter of law); Pincus v. Pabst Brewing Co., 893 F.2d 1544, 1554 (7th Cir. 1990) (excessive verdict).

Rule 50(a) permits a court to enter judgment as a matter of law against a party with respect to any issue on which the party has been fully heard if there is "no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue." Rule 50 imposes a "high standard for overturning a jury verdict." Pierson v. Hartley, 391 F.3d 898, 903 (7th Cir. 2004). Judgment as a matter of law is not appropriate unless, after drawing inferences from the evidence in the light most favorable to the party against whom the motion is directed, the court determines that no reasonable jury could have found in favor of that party. Mangren Research and Development Corp. v. National Chemical Co., Inc., 87 F.3d 937, 941 (7th Cir. 1996).

Rule 59(a) permits a court to grant a new trial "for any of the reasons for which new trials have heretofore been granted in actions at law in the courts of the United States." In practical terms, this means that a new trial should be granted "only when the record shows that the jury's verdict resulted in a miscarriage of justice or where the verdict, on the record, cries out to be overturned or shocks [the] conscience."

Davis v. Wisconsin Dept. of Corrections, 445 F.3d 971, 979 (7th Cir. 2006). A new trial may be ordered when the court erred in admitting evidence such that a party's substantial rights were violated, Naeem v. McKesson Drug Co., 444 F.3d 593, 608 -9 (7th Cir. 2006); when the jury was confused or misled because the jury instructions did not adequately state the law, Susan Wakeen Doll Co., Inc. v. Ashton Drake Galleries, 272 F.3d 441, 452 (7th Cir. 2001); when the jury's verdict was against the manifest weight of the evidence, King v. Harrington, 447 F.3d 531, 534 (7th Cir. 2006); or when the damages awarded were "monstrously excessive" or lacking rational connection to the evidence. Holmes v. Elgin, Joliet & Eastern Ry. Co., 18 F.3d 1393, 1395 (7th Cir. 1994). The decision to order a new trial is within the sound discretion of the trial court. Kempner Mobile Electronics, Inc. v. Southwestern Bell Mobile Systems, 428 F.3d 706, 716 (7th Cir. 2005).

B. Motion for Taxable Costs

Federal Rule of Civil Procedure 54(d)(1) allows a court to tax costs other than attorneys' fees in favor of a prevailing party. Pursuant to 28 U.S.C. § 1920, recoverable costs include: (1) fees of the clerk, (2) fees for transcripts, (3) fees for printing and witnesses, (4) fees for copies of papers necessarily obtained for use in the case, (5) docket fees, and (6) compensation for court-appointed experts and interpreters. A prevailing party enjoys the presumption that costs will be awarded.

See M.T. Bonk Co. v. Milton Bradley Co., 945 F.2d 1404, 1409-10 (7th Cir. 1991).

This presumption is difficult for the losing party to overcome, and a court must award costs unless it can state good reasons for not doing so. Weeks v. Samsung Heavy Indus. Co., 126 F.3d 926, 945 (7th Cir. 1997). However, a court must also determine whether the costs are allowable and reasonable both in their amount and their necessity to the litigation. Cengr v. Fusibond Piping Systems, Inc., 135 F.3d 445, 454 (7th Cir. 1998).

C. Motion for Prejudgment Interest

"The general purpose of awarding prejudgment interest is to compensate the judgment creditor for the delay caused by litigation." In re Estate of Silsby, 914 A.2d 703, 709 (Me. 2006). A prevailing party is presumed to be entitled to prejudgment interest. See, e.g., Purwin v. Robertson Enterprises, Inc., 506 A.2d 1152, 1154 (Me. 1986). For Maine civil actions in which prejudgment interest began to accrue prior to July 1, 2003, on a judgment in excess of $30,000, the rate of interest is the one-year United States Treasury bill rate plus 1%. 14 Me. Rev. Stat. § 1602-B ¶ 7(B). Despite the presumption in favor of an award of prejudgment interest, upon a showing of good cause, a court may order interest fully or partially waived. 14 Me. Rev. Stat. §1602-B ¶ 5. D. Motion for Attorneys' Fees

Under the so-called "American rule," a party to a lawsuit pays its own attorneys' fees absent some sort of authority to shift the burden, such as a statute, a rule of procedure, or prior agreement of the parties. Maine adheres to this rule and the common law of that state indicates a strong disinclination to awards of attorneys' fees. See Maietta Const., Inc. v. Wainwright, 847 A.2d 1169, 1176 (Me. 2004); Goodwin v. School Administrative Dist. No. 35, 721 A.2d 642, 646 (Me. 1998).

Moreover, Maine courts have taken a narrow approach to interpretation of statutes authorizing fee awards, stating that they will neither infer that fees are allowable in the absence of an express statutory mandate or that there is a presumption in favor of an award when ...


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