Coffel v. Stryker Corp.

• Decision Date: 14 March 2002
• Docket Number: No. 00-50602.,00-50602.
• Citation: 284 F.3d 625
• Parties: Kenneth L. COFFEL, Plaintiff-Appellant, Cross-Appellee, v. STRYKER CORPORATION, Defendant-Appellee, Cross-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

284 F.3d 625

Kenneth L. COFFEL, Plaintiff-Appellant, Cross-Appellee, v. STRYKER CORPORATION, Defendant-Appellee, Cross-Appellant.

No. 00-50602.

United States Court of Appeals, Fifth Circuit.

March 14, 2002.

Rehearing Denied April 9, 2002.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Jennifer Scott Riggs (argued), Hill, Gilstap, Adams & Graham, Austin, TX, for Coffel.

Brian S. Greig (argued), Marcy Hogan Greer, Sherrard Lee Hayes, Fulbright & Jaworski, Austin, TX, for Stryker Corp.

Appeals from the United States District Court for the Western District of Texas.

Before HIGGINBOTHAM, BARKSDALE and STEWART, Circuit Judges.

CARL E. STEWART, Circuit Judge:

Following a jury finding for Kenneth Coffel ("Coffel") on claims for fraud and breach of contract, Magistrate Judge Albright's ruling on Stryker Corporation's ("Stryker") Rule 50(b) motion reversing the fraud finding and upholding the breach of contract finding, and Magistrate Judge Austin's award of attorneys' fees, both parties appeal portions of the district court's judgment. Coffel contends on appeal that the district court erred in applying the Rule 50(b) standard, in finding insufficient evidence to support fraud and associated compensatory and punitive damages, as well as in reducing the amount of attorneys' fees awarded him. Stryker cross-appeals, arguing that the district court erred in finding sufficient evidence to support Coffel's contract claim.¹ We reverse the fraud finding, affirm the contract finding, and remand for recalculation of attorneys' fees.

FACTUAL AND PROCEDURAL BACKGROUND

As a long-time regional sales manager for Stryker's Medical Division for the Southwest Sales Region, Coffel managed territory managers throughout his sales region. Regional managers received a flat salary and, if specific sales goals were met, bonuses. In January 1995, Coffel received and signed a compensation package to govern the year, which included sales quotas to be achieved by his region ("January 1995 plan"). At that time, Stryker's Medical Division had two sales groups, one selling hospital beds and the other selling stretchers. Coffel and his territory managers were in the stretcher group.

Due to the Medical Division's economic losses in the first six months of 1995, Stryker hired both a new President for the Division, Brian Hutchison ("Hutchison"), and a new Vice President of Sales, David Johnston ("Johnston"). Under new management, a major reorganization of the Division resulted in a reduction in Stryker's sales force and the merger of the Medical Division's bed and stretcher groups. As a result, Coffel received an additional product line-beds.

As part of the restructuring, the company presented a new bonus plan to Coffel and the other regional managers for August 1995 through December 1995 (the time period from the merger to the end of the calendar year). The new bonus plan consisted of four parts: (1) the annual "percent to quota" bonus (the overall sales of a region compared to the quota set by management for that region), (2) the quarterly "balance sell" bonus (for selling across the various product lines), (3) the quarterly "discount" bonus (for limiting the amount of discounts given on sales), and (4) the annual "expense control" bonus (for reducing incidental expenses).

In August 1995, there were a series of meetings at Stryker regarding the setting of the quotas necessary to determine the compensation for the regional managers ("August meetings").² After the initial merger, Johnston met with his new group of regional managers, including Coffel, to discuss possibilities for a new compensation plan to replace the January 1995 plan. Johnston used an overhead screen and handouts to identify designated target categories and discuss bonus targets for regional managers. Coffel contends that Johnston told the regional managers: "Guys, this is a rich client. You could make a lot of money.... You could make $10,000 per category." At the conclusion of the meeting, Stryker claims that Johnston collected all copies of the draft plan and informed the regional managers that it was not complete but rather was a work in progress.

Coffel attended a subsequent meeting in August 1995 with Johnston and the other regional managers. At this meeting, the regional managers were informed that a new compensation plan would replace the January 1995 plan ("August Plan") and they discussed how quotas should be allocated to each of the newly-consolidated regions. Stryker claims that during this meeting, David Damm ("Damm"), the Medical Division's Director of Marketing, ran figures and statistics through a computer database and arrived at a preliminary quota of $3.3 million for Coffel's region.

According to Stryker, Johnston subsequently set Coffel's quota at $3.9 million. However, Coffel claims that subsequent to his acceptance of, performance under, and reliance upon Stryker's representations regarding the new contract, the company repudiated the plan by increasing his quota from $3.3 million to $3.9 million. In late August 1995, Damm sent a memorandum to Coffel detailing the quotas for the August to December 1995 time period ("Damm memo"). Coffel claims that the $3.3 million quota figure was attached to the memo, while Stryker contends that the previously discussed $3.9 million quota that Johnston set was attached to it. In early October 1995, Coffel received his compensation plan in final written form in a memorandum from Johnston dated September 29, 1995 ("Johnston plan").

Coffel continued working as a regional sales manager through the end of 1995, and on January 5, 1996, he began working as a regional project manager for Stryker. Soon thereafter, he resigned. In a February 1996 letter to Stryker, he alleged that Stryker had discriminated against him.

Coffel sued Stryker, claiming age discrimination under the Age Discrimination in Employment Act, disability discrimination under the Americans with Disabilities Act, and workers' compensation discrimination under Texas law, TEX. LAB.CODE ANN. § 45.001 (Vernon 1997). Additionally, he claimed breach of contract, fraud, and negligent misrepresentation related to bonuses to which he claimed entitlement.

The case was tried before a jury from February 1, 1999 to February 8, 1999. The jury rejected Coffel's three discrimination claims, as well as the negligent misrepresentation claim. It returned a verdict for Coffel on the fraud and breach of contract claims, awarding Coffel $8,000 in actual damages on the contract claim, $93,900 in actual damages on the fraud claim, and $400,000 in exemplary damages.

On February 17, 1999, Stryker filed a motion to set aside the verdict and for judgment as a matter of law under Federal Rule of Civil Procedure 50(b). Based on the partially favorable verdict, on March 4, 1999, Coffel filed a motion seeking an attorney fee award of $143,543.75 for fees incurred at the trial level, plus an additional $7,500 for post-verdict fees, and $12,500 for services in the event of appeal. In an order dated June 23, 1999, Magistrate Judge Albright granted Stryker's Rule 50(b) motion on the fraud and associated damages findings, but denied the motion with respect to the contract claim. Thus, Coffel's recovery was limited to $8,000 for breach of contract damages. The magistrate judge entered final judgment on July 2, 1999; however, he subsequently noted the pendency of Coffel's motion for attorneys' fees and rescinded the judgment to address that issue. Before ruling on that motion, Magistrate Judge Albright left the federal bench to return to private practice, and the attorneys' fees motion was brought before Magistrate Judge Austin. Magistrate Judge Austin awarded Coffel attorneys' fees under Texas law, but reduced his requested amount from $151,043.75 to $26,837.50 for fees incurred at trial on the breach of contract claim, plus $6,250 in the event of a successful appeal. This appeal followed.

DISCUSSION

I. Rule 50(b) Motion and the Sufficiency of Evidence

A. Standard of Review

"A motion for judgment as a matter of law ... in an action tried by jury is a challenge to the legal sufficiency of the evidence supporting the jury's verdict." Flowers v. S. Reg'l Physician Servs., 247 F.3d 229, 235 (5th Cir.2001) (internal quotations omitted) (quoting Ford v. Cimarron Ins. Co., Inc., 230 F.3d 828, 830 (5th Cir.2000)). This Court reviews de novo the district court's ruling on a motion for judgment as a matter of law, applying the same legal standard used by the district court. Id. (citing Ford, 230 F.3d at 830; Brown v. Bryan County, Okla., 219 F.3d 450, 456 (5th Cir.2000), cert. denied, 532 U.S. 1007, 121 S.Ct. 1734, 149 L.Ed.2d 658 (2001)). "Although our review is de novo,... our standard of review with respect to a jury verdict is especially deferential." Flowers, 247 F.3d at 235 (internal quotations omitted) (quoting Brown, 219 F.3d at 456). Therefore, judgment as a matter of law should only be granted if "the facts and inferences point so strongly and overwhelmingly in the movant's favor that reasonable jurors could not reach a contrary conclusion." Id. (internal quotations omitted) (quoting Omnitech Int'l, Inc. v. Clorox Co., 11 F.3d 1316, 1322 (5th Cir.1994)).

Under Rule 50, "judgment as a matter of law is proper after a party has been fully heard by the jury on a given issue, and there is no legally sufficient evidentiary basis for a reasonable jury to have found for that party with respect to that issue." Id. (internal quotations omitted) (quoting Ford, 230 F.3d at 830). Moreover, in entertaining a Rule 50 motion the court "must review all of the evidence in the record, draw all reasonable inferences in favor of the nonmoving party, and may not make credibility determinations or weigh the evidence." Ellis v. Weasler Eng'g Inc., 258 F.3d 326, 337 (5th Cir.2001) (citing Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000)). ...