Global v. United Parcel Serv. Oasis Supply Corp.

• Decision Date: 30 June 2014
• Docket Number: No. 13–489–cv.,13–489–cv.
• Citation: 757 F.3d 92
• Parties: ING GLOBAL, Plaintiff–Counter–Defendant–Appellant, v. UNITED PARCEL SERVICE OASIS SUPPLY CORPORATION, Defendant–Counter–Claimant–Appellee.
• Court: U.S. Court of Appeals — Second Circuit

757 F.3d 92

ING GLOBAL, Plaintiff–Counter–Defendant–Appellant,

v.UNITED PARCEL SERVICE OASIS SUPPLY CORPORATION, Defendant–Counter–Claimant–Appellee.

No. 13–489–cv.

United States Court of Appeals, Second Circuit.

Argued: Dec. 12, 2013.

Decided: June 30, 2014.

Appeal from an order of the United States District Court for the Southern District of New York (Samuel Conti, Judge ),¹ setting aside on the ground of manifest injustice a verdict awarding plaintiff, ING Global, attorney's fees on breach of contract claims. We hold that in light of defendant UPS's failure to move pursuant to Rule 50(a) and the existence in the record of evidentiary support for the verdict, the district court erred in setting the verdict aside. We also conclude that a new trial is not warranted. REVERSED and REMANDED.

John J. Zefutie, Jr. (Justin S. Strochlic, Ugo Colella, Anthony J. Laura, on the brief), Patton Boggs LLP, Newark, NJ, for Plaintiff–Counter–Defendant–Appellant, ING Global.

Robert E. Kaelin (Michael D. Goldfarb, on the brief), Murtha Cullina LLP, Hartford, CT, for Defendant–Counter–Claimant–Appellee, United Parcel Service Oasis Supply Corporation.

Before: POOLER, PARKER, and WESLEY, Circuit Judges.

BARRINGTON D. PARKER, Circuit Judge:

In October 2012, following a six-day trial, the jury returned a verdict in favor of plaintiff, ING Global (“ING”), on its breach of contract claims. The jury also awarded ING attorney's fees, to be set the court, as permitted by Georgia law which governed the contract. Despite its failure to have moved pursuant to Rule 50(a) for judgment as a matter of law prior to the submission of the case to the jury, defendant, United Parcel Service Oasis Supply Corporation (“UPS”), subsequently moved pursuant to Rule 59(e) to amend the judgment to set aside the award of attorney's fees or, alternatively, for a new trial on the issue of attorney's fees. The district court concluded that because the verdict was without legal support, it constituted manifest injustice and set aside the award of attorney's fees. UPS does not appeal from the jury's verdict against it on the breach of contract claims.

We hold that in light of UPS's failure to have moved for relief pursuant to Rule 50(a) and the existence of evidentiary support in the record for the jury's verdict, the district court erred in setting the verdict aside. We also conclude that a new trial is not warranted. Accordingly, we reverse the order granting UPS's motion and remand with instructions to reinstate the verdict and resolve ING's motion to set attorney's fees.

I. BACKGROUND

The facts relevant to our decision are as follows. ING is a small company that produces Reusable Network Containers (“RNCs”), mesh bags used by UPS to consolidate numerous small packages into a larger one to reduce the number of handlings required by UPS's sorting and transportation system.

In 2010 UPS selected ING as the winner of a bidding process to become UPS's primary supplier of new RNCs. UPS and ING entered into contracts that contemplated an estimated volume of 1.2 million new RNCs over the three-year term of the agreement. The contracts reserved to UPS the discretion to adjust the quantity or timing of the order for new RNCs, and also provided that additional quantities of new RNCs would be purchased according to an annexed price schedule.

During the summer of 2011, UPS decided to purchase an additional 624,629 new RNCs before the end of the year and, turning to other suppliers, backed away from its contract with ING. In the course of planning for the new order, the UPS commodity manager responsible for RNCs acknowledged in internal emails that UPS had “contracts in place” to cover the additional RNC's and that UPS had obligations under those contracts. However, in nearly simultaneous emails to ING, he took the contrary position that the new order of RNCs was separate from the existing contracts and that UPS had no purchase obligations under its existing contracts with ING.

He ultimately treated the 2011 order as separate from the existing contracts and invited several new vendors to submit bids. ING objected, contending that UPS's steps to rebid the order breached their contracts. However, in early August 2011, UPS awarded the contract for the additional RNCs to a competitor of ING that had offered a lower price.

ING then sued UPS for breach of the contracts. ING also alleged that UPS had acted in bad faith and sought to recover attorney's fees, as permitted under applicable Georgia law when a party acts in bad faith in making or performing a contract. Ga.Code Ann. § 13–6–11.

As part of their pretrial submissions, the parties submitted joint proposed jury instructions that explained the meaning of bad faith under Georgia law:

Bad faith does not refer to bad faith in the prosecution of this litigation, but rather to the acts of UPS in dealing with ING prior to ING's filing of this lawsuit. Bad faith means a frivolous and unfounded denial of liability. If you find that UPS's actions before ING filed this lawsuit were frivolous and unfounded, then you must find that UPS acted in bad faith and award ING its attorney's fees. On the other hand, if you find that UPS had any reasonable ground to contest ING's breach of contract claim, then you must find there is not bad faith on the part of UPS and not award ING its attorneys' [sic] fees.

Simultaneously, UPS filed a motion in limine to preclude the introduction at trial of evidence of bad faith or of attorney's fees on the ground that, as a matter of law, it had a “reasonable ground” to contest ING's claims.² UPS's motion was denied and ING's claims proceeded to trial, during which it was permitted to present its evidence of bad faith which centered primarily around the conflicting emails and the denials by UPS that its contracts with ING obligated it to purchase additional RNC's from ING rather than competitors.

During the proceedings, UPS and ING each submitted proposed jury instructions that included a definition of bad faith substantively identical to the version submitted before trial, except that ING objected to the inclusion of the “reasonable ground” defense in the jury instructions. The district court overruled that objection, adopted UPS's proposed instruction that included the “reasonable ground” defense with only minor non-substantive changes, and delivered it to the jury. UPS did not move pursuant to Rule 50 to challenge the sufficiency of ING's evidence of bad faith nor did it move for judgment as a matter of law on the basis that the “reasonable ground” defense precluded an award of attorney's fees.

Subsequently, the jury returned a verdict in favor of ING on the breach of contract claim, awarding it approximately $1.7 million in damages, which is not contested on this appeal. The jury also found that ING was entitled to an award of attorney's fees, which meant that the jury had found that UPS had acted in bad faith.

Following the verdict and the entry of judgment, ING moved to set the amount of attorney's fees and UPS cross-moved, pursuant to Rule 59, to amend the judgment by setting aside the award of attorney's fees or, in the alternative, for a new trial on fees on the ground that the verdict awarding them was against the weight of the evidence. In its motion, UPS raised for the first time new challenges to the court's charge on bad faith. UPS contended that Georgia law recognizes two distinct, mutually exclusive theories of bad faith; the “frivolous and unfounded denial of liability” theory which ING had argued and presented to the jury, and a separate “sinister motive” theory, involving “dishonest purpose,” “conscious doing of wrong,” or a “breach of known duty through some motive of interest or ill will.” Special App'x 17. UPS contended that under the former (but not the latter) theory a party with a “reasonable defense” to a claim cannot be found to have acted in bad faith and that it had such a defense.

Notwithstanding that (1) the court had delivered the charge on this issue that UPS had requested; (2) UPS had failed to object to the charge under Rule 51; and (3) UPS had not argued that it was entitled to judgment as a matter of law under Rule 50(a), the district court accepted UPS's interpretation of Georgia law. The district court concluded that the “frivolous and unfounded denial of liability” theory did not apply because it was limited to cases in which one party refused to pay the other. After reviewing the evidence, the court concluded that UPS had reasonable, nonfrivolous defenses. Even though it had not instructed the jury on the “sinister motive” theory of bad faith, the district court analyzed the case under that theory and concluded that ING's claim could not succeed under that alternative.

Because UPS was seeking to have the jury's award of attorney's fees set aside and to have judgment entered in its favor on the issue, the district court concluded that UPS was “effectively” moving under Rule 50(b) for judgment as a matter of law, notwithstanding both the verdict and its failure to make an earlier motion as required under Rule 50(a). The court then held that the jury's finding on fees was “clearly erroneous” and concluded that “to prevent manifest injustice,” it was required to set aside the award of attorney's fees or grant a new trial on fees. After reweighing the evidence, the district court concluded that a new trial could not result in a verdict in favor of ING. The court then set aside the award of attorney's fees, effectively granting UPS judgment as a matter of law on the issue. This appeal followed.

II. DISCUSSION

A. Legal Standards

Rule 59(e) allows a district court “to alter or amend a judgment.” Fed.R.Civ.P. 59(e). We have explained that under the rule “district courts may alter or amend judgment to correct a clear error of law or prevent manifest injustice,” that the rule “covers a broad range of motions,” and that “the only real limitation on the type of the...