Utah Foam Products Co. v. Upjohn Co.

• Decision Date: 04 September 1998
• Docket Number: Nos. 97-4007,97-4008,s. 97-4007
• Parties: 98 CJ C.A.R. 4793 UTAH FOAM PRODUCTS CO., a Utah corporation, Plaintiff-Appellant-Cross-Appellee, v. THE UPJOHN COMPANY, a Delaware corporation, Defendant-Appellee-CrossAppellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1212

154 F.3d 1212

98 CJ C.A.R. 4793

UTAH FOAM PRODUCTS CO., a Utah corporation, Plaintiff-Appellant-Cross-Appellee, v. THE UPJOHN COMPANY, a Delaware corporation,

Defendant-Appellee-CrossAppellant.

Nos. 97-4007, 97-4008.

United States Court of Appeals, Tenth Circuit.

Sept. 4, 1998.

C. Richard Henriksen, Jr., Henriksen & Henriksen, P.C., Salt Lake City, UT, (Ralph W. Curtis, Henriksen & Henriksen, P.C., Salt Lake City, UT, with him on the briefs) for Plaintiff-Appellant.

Jonathan A. Dibble, Ray, Quinney & Nebeker, Salt Lake City, UT, (Stephen B. Nebeker and Rick B. Hoggard, Ray, Quinney & Nebeker, Salt Lake City, UT, with him on the briefs) for Defendant-Appellee.

Before TACHA, BRORBY and EBEL, Circuit Judges.

EBEL, Circuit Judge.

Plaintiff-Appellant Utah Foam Products Co. ("Utah Foam") appeals from a jury verdict and order of damages in its favor on its fraud and negligent misrepresentation claims against Defendant-Appellee, The Upjohn Company ("Upjohn"). Utah Foam claims that the district court erred in making certain evidentiary rulings, in dismissing Utah Foam's claim under the Utah Unfair Trade Practices Act, and in denying Utah Foam's request for prejudgment interest on damages awarded. Utah Foam also claims that the district court judge erred in refusing to recuse himself from the case. Upjohn brings a cross-appeal, claiming that the district court erred in refusing to grant judgment as a matter of law in favor of Upjohn on Utah Foam's fraud and negligent misrepresentation claims. We affirm the jury's verdict and all of the district court's rulings.

Background

This lengthy litigation grew out of a dispute about the price Upjohn charged Utah Foam for polymeric isocyanate (trade name "PAPI"), a chemical made by Upjohn and used by Utah Foam in making rigid sprayable polyurethane foam, an insulating material. From 1978 until 1986, Upjohn contracted to supply Utah Foam with PAPI 27, one of the types of isocyanate made by Upjohn. According to Utah Foam, Upjohn fraudulently and negligently misrepresented to Utah Foam that Utah Foam would always be the recipient of Upjohn's "best price" for PAPI. See Utah Foam Products Co. v. The Upjohn Company, 930 F.Supp. 513, 516 (D.Utah 1996). Utah Foam discovered this alleged fraud and misrepresentation when circumstances forced Utah Foam to buy PAPI 27 from one of Utah Foam's competitors, and found that the competitor was able to offer the product to Utah Foam at a lower price than that charged by Upjohn.

In July, 1987, Utah Foam filed suit against Upjohn, claiming that Upjohn violated Utah's Unfair Practices Act, breached the contract, and committed fraud and negligent misrepresentation. Utah Foam requested compensatory and punitive damages. During a drawn-out period of pretrial litigation, the district court repeatedly ruled that Upjohn's records regarding the sales of PAPI 135 would not be subject to discovery in this case, because PAPI 135 was not of like grade and quality to PAPI 27, the subject of Utah Foam's Unfair Practices claim. ¹ The district court also denied Utah Foam's motions to compel production of sales records of CPR, a wholly-owned subsidiary of Upjohn, on the basis that all deliveries of PAPI from Upjohn to CPR qualified as intra-company transfers, and not sales, and thus they were irrelevant to Utah Foam's claims. On January 12, 1994, the district court granted summary judgment to Upjohn on Utah Foam's state price discrimination claim. The district court dismissed Utah Foam's breach of contract claim on October 18, 1994. On December 18, 1995, the district court ruled that Utah Foam's experts' testimony as to the calculation of damages would be limited to proving lost margins, based upon differences in the net price paid for PAPI, and not lost sales. On January 26, 1996, Utah Foam filed a motion for recusal, on the ground that the district court judge had exhibited bias against Utah Foam and favoritism for one of Upjohn's counsel. After a hearing, the district court denied the motion.

Utah Foam's fraud and negligent misrepresentation claims went to trial before a jury on February 20, 1996. See Utah Foam, 930 F.Supp. at 515. The jury found that Upjohn had made fraudulent and negligent misrepresentations to Utah Foam regarding the price of PAPI, and awarded Utah Foam $313,593 in compensatory damages plus $5.5 million in punitive damages. See id. at 516. Upjohn moved under Federal Rule of Civil Procedure 50(b) to vacate or adjust the award of compensatory damages on Utah Foam's fraud and negligent misrepresentation claims. See id. at 518. The court refused to vacate the award, but reduced the amount of compensatory damages to $303,573.11. See id. at 518-22, 532. The district court also denied Upjohn's Rule 50(b) motion to vacate the award of punitive damages, but granted its motion for remittitur, reducing the punitive damages award to $607,142.22. See id. at 523-32. In addition, the district court denied Utah Foam's motion for prejudgment interest. See id. at 522-23. The district court then issued an order offering Utah Foam the option of accepting remittitur or undergoing a new trial on all issues. See Utah Foam Prods. Co. v. The Upjohn Co., 930 F.Supp. 513, 519-22 (D.Utah 1996) (unpublished order). Utah Foam accepted remittitur.

Utah Foam now appeals the district court's evidentiary rulings restricting the discovery of Upjohn's PAPI 135 sales records, prohibiting discovery of CPR's records, and limiting Utah Foam's experts' testimony as to estimated losses and damages; the district court's denial of prejudgment interest; the district court's dismissal of Utah Foam's Utah Unfair Practices claim; and the district court's denial of Utah Foam's motion to recuse. Upjohn cross-appeals the district court's refusal to grant Upjohn's Rule 50(b) motion to vacate the jury's finding of liability for fraud and negligent misrepresentation.

I. Acceptance of remittitur

In Donovan v. Penn Shipping Co., Inc., 429 U.S. 648, 650, 97 S.Ct. 835, 51 L.Ed.2d 112 (1977) (per curiam), the Supreme Court reiterated "the longstanding rule that a plaintiff in federal court, whether prosecuting a state or federal cause of action, may not appeal from a remittitur order he has accepted." The policy underlying this rule sounds in contract law. By accepting remittitur of damages in lieu of a new trial, the plaintiff has accepted the benefit of not having to undergo the rigors, risks, and costs of a new trial in exchange for an agreement not to challenge the damages award or otherwise appeal any matter pertaining to the issues covered by the remittitur offer. However, a party who has accepted remittitur of damages on one cause of action may still appeal issues related to other causes of action not subject to the remittitur order. See Denholm v. Houghton Mifflin Co., 912 F.2d 357, 359 & n. 2 (9th Cir.1990) (listing cases); Call Carl, Inc. v. BP Oil Corp., 554 F.2d 623, 626-27 (4th Cir.1977); Bruce I. McDaniel, Annotation, Plaintiff's right to appeal adverse judgment on one cause of action as affected by acceptance of remittitur on another cause of action, 41 A.L.R. Fed. 856, 857, 1979 WL 52089 (1979).

In Alley v. Gubser Dev. Co., 785 F.2d 849, 856-57 (10th Cir.1986), the district court gave the plaintiffs a choice between remittitur of the jury's punitive damages award or a new trial on all issues. The plaintiffs chose remittitur. When the plaintiffs attempted to appeal the district court's denial of attorney's fees and prejudgment interest on the compensatory damages, we held that they were barred from doing so under Donovan. See id. In short, the well-established rule is that acceptance of remittitur of damages effectively waives the right to appeal any issue pertaining to the causes of action covered by the remittitur offer. See Denholm, 912 F.2d at 360-61 (acceptance of remittitur of compensatory damages bars appeal of pretrial orders excluding evidence relevant to proving those damages). Moreover, acceptance of remittitur of either compensatory or punitive damages bars appeal of issues related to both. See Alley, 785 F.2d at 857 ("[T]he district court's remittitur embraced all issues considered in the case and ... the Alleys' acceptance of the remittited judgment waives their right to appeal these issues."); see also Lanier v. Sallas, 777 F.2d 321, 322 (5th Cir.1985) (because punitive damages and compensatory damages based upon same cause of action are "inextricably intertwined," acceptance of remittitur of compensatory damages barred appeal of district court's refusal to submit issue of punitive damages to the jury).

Here, Utah Foam does not dispute that it had the choice of accepting either remittitur of its damages based upon its fraud and negligent misrepresentation claims or face a new trial on those claims. Nor does Utah Foam attack the district court's decision to impose remittitur, but rather seeks to appeal the court's rulings on issues directly related to Utah Foam's claims at trial, namely, the district court's denial of pre-judgment interest, its rulings limiting the scope of discovery of Upjohn's PAPI records, its ruling denying discovery of CPR's PAPI documents, and its limitation of Utah Foam's experts' testimony as to the calculation of damages. Because Utah Foam accepted remittitur of damages on its fraud and negligent misrepresentation claims and thereby avoided a complete retrial of those issues, Alley bars Utah Foam's appeal of all issues which relate to those claims. We find that Utah Foam's acceptance of remittitur waived the right to appeal these issues and decline to consider them now.

II. Utah Unfair Practices Act claim

Because the Utah Unfair Practices Act claim did not go before the jury in this case and the district court did not order a retrial of that claim in the event Utah Foam did not accept the remittitur on the fraud and negligent misrepresentation claims, Utah Foam did not waive the right to appeal the dismissal by...