Feld Motor Sports, Inc. v. Traxxas, L.P., 16-40686
| Citation | 861 F.3d 591 |
| Decision Date | 30 June 2017 |
| Docket Number | No. 16-40686,16-40686 |
| Parties | FELD MOTOR SPORTS, INCORPORATED, Plaintiff–Appellee v. TRAXXAS, L.P., Defendant–Appellant Traxxas, L.P., Plaintiff v. Feld Motor Sports, Incorporated, Defendant |
| Court | U.S. Court of Appeals — Fifth Circuit |
Charles T. Kimmett, Jr., Walter Anderson, John Grimm, Susannah Larson, Timothy J. Simeone, Harris, Wiltshire & Grannis, L.L.P., Washington, DC, for Plaintiff–Appellee.
James C. Ho, Esq., Kyle Douglas Hawkins, Gibson, Dunn & Crutcher, L.L.P., Jeffrey Wallace Hellberg, Jr., Joseph Sean Lemoine, Counsel, Wick Phillips Gould & Martin, L.L.P., Dallas, TX, for Defendant–Appellant.
Before STEWART, Chief Judge, and WIENER and PRADO, Circuit Judges.
Traxxas, LP ("Traxxas") appeals the district court's order rendering judgment in conformity with the jury verdict that found it owed Feld Motor Sports, Inc. ("FMS") additional royalties under a licensing agreement. Traxxas argues that the district court erred in submitting the New York law contract to a jury because the contract is unambiguous. FMS first contends that we lack jurisdiction over the appeal and alternatively that we should uphold the district court's legal conclusion in denying summary judgment. We hold that this court has jurisdiction and AFFIRM.
This case pits the maker of radio control ("RC") vehicles against the producer of a monster truck show. Traxxas builds RC vehicles, while FMS owns and promotes a live monster truck show, Monster Jam ("MJ").1 Traxxas makes a wide range of RC vehicles, including the Stampede line of hobby-grade RC trucks.
In 2010, the parties entered into the Monster Jam Merchandise License Agreement ("the Agreement"). Under the Agreement, Traxxas would produce and sell certain Stampede trucks branded with FMS's MJ intellectual property. The Agreement had a fixed term, running from October 1, 2010 to December 31, 2013. The parties do not dispute that the Agreement covers the base model Stampede, with or without the MJ branding. This base Stampede was the only one sold with MJ-branded variations. The Stampede is a model truck that wholesales for $150. In addition to the standard Stampede truck, Traxxas makes other RC trucks that comprise its Stampede line of products, which it argues are not covered by the Agreement. The Stampede line of RC trucks is distinguishable from other RC vehicle lines Traxxas sells.
Four different RC trucks in the Stampede line are at issue: the Stampede Nitro, the Stampede VXL, the Stampede 4x4, and the Stampede 4x4 VXL. These premium models are considerably more expensive, wholesaling from anywhere between $220 to over $300. The premium models differ from the base Stampede in power source, parts, design, and method of control. For instance, the Stampede Nitro is liquid-fuel powered, instead of battery powered. Additionally, the Stampede 4x4 and 4x4 VXL were introduced after the parties entered into the Agreement, in 2010 and 2013 respectively.
The Agreement's Licensed Articles and Royalty Rate provisions form the basis of the parties' dispute. Clause 2 defines "Licensed Articles":
2. Licensed Articles: Hobby-grade battery-operated remote control operated monster truck vehicles ("R/C Vehicle Units ") and monster truck vehicle bodies ("R/C Bodies ") branded with the Property.[2 ] Licensed Articles shall include a minimum of four (4) different monster truck molds of R/C bodies each year, for each year during the Term other than 2010.
Clause 5 sets out the royalties to be paid.
5. Royalty Rate: In determining the number of Licensed Articles on which [FMS] will receive royalties, "Licensed Articles" shall be deemed to include all R/C Vehicle Units and R/C Bodies manufactured with the Stampede chassis and/or Stampede body, whether or not branded with the Property or "Stampede."
The Agreement also exempted the first 30,000 "Licensed Articles" sold from royalties. Over the term of the Agreement, Traxxas paid FMS royalties only on the standard Stampede and MJ-branded Stampedes. After the Agreement expired, FMS hired an outside firm to conduct an audit, pursuant to an audit provision in the Agreement. The audit concluded that Traxxas likely owed additional royalties on other Stampede line vehicles that approached $1 million.
Traxxas initiated proceedings by filing suit in Texas state court, seeking a declaratory judgment that it did not owe any additional royalties. FMS subsequently removed that suit to the Eastern District of Texas. FMS then filed suit in the Eastern District of Virginia for breach of contract. Ultimately, the two cases were consolidated in the Eastern District of Texas with FMS as the plaintiff.
The parties filed dueling motions for summary judgment. Both parties claimed that the Agreement was unambiguous and supported only their respective interpretations. Traxxas argued that it clearly owed no additional royalties under the plain language of the contract, while FMS insisted that the plain language showed Traxxas owed royalties on the entire Stampede line. The district court denied both motions, concluding that the contract was ambiguous, and the case proceeded to trial.
After a seven-day trial, the jury found Traxxas owed FMS royalties on the entire Stampede line and awarded FMS all additional royalties it sought. Traxxas then filed a combined renewed motion for judgment as a matter of law, motion for a new trial, or alternative motion to modify the judgment. The district court denied Traxxas's motion. The district court also awarded FMS attorneys' fees and costs in accordance with the contract.
Traxxas appeals.
While Traxxas appeals the district court's determination that the contract was ambiguous, FMS advances two reasons why it alleges that this court should not reach the merits of Traxxas's appeal. First, FMS avers that this court lacks jurisdiction to hear the appeal. Second, it argues the invited error doctrine bars Traxxas's claims. Alternatively, FMS insists that on the merits, the Agreement is at least ambiguous and that the district court did not err in submitting the issue to the jury.
Our court has an independent duty to examine the basis of its jurisdiction. Charles v. Atkinson , 826 F.3d 841, 842 (5th Cir. 2016) (per curiam). In Blessey Marine Services Inc. v. Jeffboat, L.L.C. , we recognized the general rule that "an interlocutory order denying summary judgment is not to be reviewed when final judgment adverse to the movant is rendered on the basis of a full trial on the merits." 771 F.3d 894, 897 (5th Cir. 2014) (quoting Black v. J.I. Case Co. , 22 F.3d 568, 570 (5th Cir. 1994) ). So far, the Fifth Circuit has recognized only one narrow exception to this rule. See id. In Becker v. Tidewater, Inc. , this court held that we could review "the district court's legal conclusions in denying summary judgment" but only when "the case was a bench trial." 586 F.3d 358, 365 n.4 (5th Cir. 2009). We reasoned in Becker that "because Rule 50[3 ] motions are not required to be made following a bench trial, it is appropriate to review the court's denial of summary judgment in this context." Id.
In Blessey , this court acknowledged in dicta that it may "have jurisdiction to hear an appeal of the district court's legal conclusions following a jury trial, but only if the party restated its objection in a Rule 50 motion."4 771 F.3d at 898. We noted that our reasoning in Becker supports this conclusion because if the reason for the exception is that a bench trial does not require a Rule 50 motion, the inverse of this principle would be that a legal question addressed in a ruling on summary judgment could be reviewed after a jury trial if it was preserved in a Rule 50 motion. Id. However, we declined to address this question because the party in Blessey never made a Rule 50 motion. Id.
With the question now squarely before us, we hold that following a jury trial on the merits, this court has jurisdiction to hear an appeal of the district court's legal conclusions in denying summary judgment, but only if it is sufficiently preserved in a Rule 50 motion. In doing so, we join with the First, Fourth, and Eighth Circuits. N.Y. Marine & Gen. Ins. Co. v. Cont'l Cement Co., LLC , 761 F.3d 830, 838 (8th Cir. 2014) (); Ji v. Bose Corp. , 626 F.3d 116, 128 (1st Cir. 2010) (); Chesapeake Paper Prods. Co. v. Stone & Webster Eng'g Corp. , 51 F.3d 1229, 1235 (4th Cir. 1995) ().
Traxxas's Rule 50(a) and renewed Rule 50(b) motion sufficiently preserved its objection to the district court's ruling. While the arguments in Traxxas's motions focus primarily on the sufficiency of the evidence, it noted its "disagree[ment] with the [c]ourt's determination that the License Agreement was ambiguous." It also objected that FMS's competing interpretation of the Agreement was not reasonable so that it "require[d] judgment as a matter of law." The district court addressed its ruling on ambiguity when entertaining Traxxas's renewed Rule 50 motion, stating "[a]s a preliminary matter, the [c]ourt has found the license agreement to be ambiguous." Under these circumstances, Traxxas sufficiently preserved its argument for appellate review. See Navigant Consulting, Inc. v. Wilkinson , 508 F.3d 277, 288 (5th Cir. 2007) (...
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