Alphamed, Inc. v. B. Braun Medical, Inc., 03-13266.

• Citation: 367 F.3d 1280
• Decision Date: 30 April 2004
• Docket Number: No. 03-13266.,03-13266.
• Parties: ALPHAMED, INCORPORATED, Plaintiff-Counter-Defendant-Appellant, Cross-Appellee, v. B. BRAUN MEDICAL, INC., McGaw, Inc., Defendants-Counter-Claimants-Appellees, Cross-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

367 F.3d 1280

ALPHAMED, INCORPORATED, Plaintiff-Counter-Defendant-Appellant, Cross-Appellee, v. B. BRAUN MEDICAL, INC., McGaw, Inc., Defendants-Counter-Claimants-Appellees, Cross-Appellants.

No. 03-13266.

United States Court of Appeals, Eleventh Circuit.

April 30, 2004.

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Kara W. Ong, Ben F. Easterlin, IV, James W. Boswell, III, John P. Brumbaugh, King & Spalding, Atlanta, GA, for Alphamed, Inc.

Kannon Kumar Shanmugam, Kenneth Winston Starr, Kirkland & Ellis, Washington, DC, Dow N. Kirkpatrick, II, Robert Luckett Lee, Alston & Bird, L.L.P., for Defendants.

Appeals from the United States District Court for the Northern District of Georgia.

Before DUBINA and HILL, Circuit Judges, and OWENS^*, District Judge.

DUBINA, Circuit Judge:

After three jury trials and more than five years of heated litigation in this Georgia contract dispute, Appellant/Cross-Appellee Alphamed, Inc. ("Alphamed") appeals from the district court's amended entry of judgment, following a jury verdict in Alphamed's favor, in which the district court reduced the judgment to preclude Alphamed from recovering overhead costs that Alphamed never incurred, and reduced Alphamed's award of prejudgment interest. Appellees/Cross-Appellants B. Braun Medical, Inc. and McGaw, Inc.¹ (collectively "Braun") also appeal on the ground that the district court erred in concluding that the law of the case doctrine precluded it from granting Braun's motion for judgment as a matter of law. In the alternative, Braun contends that the district court should have permitted the jury to calculate the "gross revenues" portion of Alphamed's contractual damages and Alphamed's prejudgment interest. For the reasons that follow, we affirm the district court's entry of judgment in all respects.

I. FACTS AND PROCEDURAL HISTORY

In September 1995, the parties entered into an agreement for the manufacture and sale of ambulatory infusion pumps (the "Agreement"), which obligated Alphamed to produce 7,600 pumps over a four-year term, and to sell them to Braun at fixed prices. Unsure of its ability to comply with the terms of the Agreement, Alphamed bargained for a default provision with a broad cure right that precluded Braun from terminating the Agreement in the event of Alphamed's default unless Alphamed failed to take "steps" to cure the default, which were to Braun's reasonable satisfaction, within thirty days of notice of default.

After more than two years of delays, Alphamed had not produced a single marketable pump, and the parties' relationship began to deteriorate. The few pumps that Alphamed produced regularly suffered from serious infirmities and regularly failed Braun's quality assurance protocols. In December 1997, Braun sent Alphamed a notice of default, alleging that Alphamed had failed to supply pumps within the time frame specified in the Agreement. While Braun assured Alphamed that it intended this notice of default to serve as a "wake up call," and withdrew it shortly thereafter, Braun sent Alphamed a second default notice in February 1998, and rejected Alphamed's efforts to cure the default. In March 1998, Braun terminated the Agreement.

In April 1998, Alphamed commenced this breach of contract action in a Georgia superior court. Braun removed the case on the basis of diversity and asserted a counterclaim for the return of a $2 million deposit that it had paid to Alphamed upon the execution of the Agreement. Following extensive discovery, the district court referred the case to a special master for an evidentiary hearing. After a two-week hearing, the special master found that Braun had rightfully terminated the Agreement and was entitled to the return of its $2 million deposit.

During the first of the three jury trials, the district court reduced the liability issues presented in the case to three questions, which it submitted to the jury as special interrogatories: (1) whether Alphamed was in substantial compliance in February 1998, when Braun served its second notice of default; (2) if not, whether Alphamed initiated steps to cure within the 30-day period following the notice of default; and (3) if so, whether Braun was unreasonable in deciding that Alphamed had not initiated reasonably satisfactory steps to cure its default within the 30-day period. The jury found that Alphamed was in substantial compliance when Braun served its second notice of default and, therefore, did not proceed to questions two and three. The jury awarded Alphamed $4.4 million in damages.

After the first trial, Braun moved for judgment as a matter of law and, alternatively, for a new trial. The district court granted this motion in August 2001, vacating Alphamed's judgment and entering judgment for Braun in the amount of $1.85 million. The district court further granted Braun's motion for a new trial in the event of vacatur on appeal after concluding that "the verdict was most probably due to the seriously improper closing argument by plaintiff's counsel," Ben F. Easterlin IV. During the rebuttal portion of his closing argument, Easterlin was determined to introduce evidence of the pump's safety by demonstrating that he was personally willing to hook himself up to the pump. Even after the district court instructed him, then admonished him, not to introduce such evidence, Easterlin stated during his rebuttal that "[i]f this were not a safe pump, would I risk the future of my wife and three children by hooking myself up? This was a quality pump."

On appeal, we reversed the district court's entry of judgment as a matter of law. Alphamed, Inc. v. B. Braun Med., Inc., 52 Fed.Appx. 491 (11th Cir.2002) ("Alphamed I"). In doing so, we stated that judgment as a matter of law would only have been appropriate in this case if there was no evidence sufficient to sustain a jury's verdict on any of the three special interrogatories. Id., at *10 ("To find as a matter of law for Braun, ... there must be no substantial evidence to support either the jury's verdict or its potential verdict for Alphamed as to [special interrogatories] two and three."). While we commented that "[i]t appears that substantial evidence exists to support the determination of `substantial compliance' by the jury," we concluded that the sufficiency of evidence supporting the jury's potential verdict on the third interrogatory — concerning whether Braun acted unreasonably in rejecting Alphamed's attempts to cure the alleged default-was "clearly dispositive." Id., at *11.

We also rejected the district court's contention that Alphamed sought future profits that were too speculative to recover, as opposed to verifiable contractual damages. Id., at *17-19. We noted that "[t]he Agreement sets forth specific quantity and price terms for the duration of the contract," and concluded that, "[i]n the event that Alphamed prevails in the new trial, recovery of [damages based on these specific quantity and price terms] is not speculative." Id., at *18.

Although we held that the grant of judgment as a matter of law was inappropriate, we affirmed the district court's grant of a new trial in light of Easterlin's thoroughly unprofessional conduct during his closing argument. While we chose not to sanction Easterlin, we commented that "[i]t is a sufficient rebuke to observe that in light of our decision today that had Easterlin not engaged in such conduct, he and his client might be enjoying a jury verdict in their favor rather than awaiting a new trial." Id., at *17.

On remand, the district court commenced a second trial, which ended in a mistrial after the jury failed to reach a verdict. The court then commenced the third jury trial in February 2003, which is the subject of this appeal. In addressing the liability issues presented, the court submitted two special interrogatories to the jury that were identical in all material respects to the first and third interrogatories that it had submitted to the jury in the first trial: (1) whether Alphamed was in substantial compliance with the Agreement in February 1998; and, if not (2) whether Braun was unreasonable in deciding that Alphamed had not initiated reasonably satisfactory steps to cure its default within the 30-day period following the notice of default. Consistent with the result in the first trial, the jury found unanimously that Alphamed was in substantial compliance in February 1998, and did not proceed to the second issue.

With respect to Alphamed's damages, the district court submitted a special verdict form to the jury, on which the district court directed the jury to enter $17,867,001 for Alphamed's projected gross revenues. The court arrived at this figure by multiplying the quantity and price terms set forth in the Agreement, in accordance with our instruction in Alphamed I that Alphamed's recovery could be based on the assumption that the parties would have fully performed were it not for Braun's breach. See id., at *18. The district court also asked the jury to determine whether or not Alphamed was entitled to prejudgment interest, but did not give the jury the opportunity to fix its value. Based on the jury's findings, the district court entered judgment for Alphamed and awarded Alphamed damages of $9,045,099 and $1,968,759 of prejudgment interest.

Braun once again moved for judgment as a matter of law. The district court granted Braun's motion in part, solely due to the insufficiency of evidence supporting the jury's determination of the "reasonably allocated overhead" deduction from Alphamed's recovery. The jury had fixed the deduction at $815,364, even though the undisputed testimony at trial projected Alphamed's overhead for the four-year contract term to be $4,529,085. The district court increased this deduction to preclude Alphamed from recovering costs that it would never incur.

In addition, the district court reduced its prejudgment interest calculation, after concluding that Alphamed was not entitled to interest on the $2...