AcryliCon USA, LLC v. Silikal GMBH & Co.

Decision Date29 August 2022
Docket Number21-12853
Citation46 F.4th 1317
Parties ACRYLICON USA, LLC, a Delaware limited liability company, Plaintiff-Appellee Cross-Appellant, v. SILIKAL GMBH & CO., a foreign corporation, et al., Defendants, Silikal GMBH, a foreign company, Defendant-Appellant Cross-Appellee.
CourtU.S. Court of Appeals — Eleventh Circuit

Henry D. Fellows, Jr., Michael Coleman Gretchen, Fellows LaBriola, LLP, Atlanta, GA, Jeffrey B. Crockett, Scott A. Hiaasen, Kevin C. Kaplan, Coffey Burlington, PL, Miami, FL, Gabriel Groisman, Llorente & Heckler, PA, Miami Beach, FL, for Plaintiff-Appellee Cross Appellant.

Mark Emery, David Thomas Kearns, Matthew H. Kirtland, Norton Rose Fulbright US, LLP, Washington, DC, Keith Hasson, Michael F. O'Neil, Hasson Law Group, PC, Atlanta, GA, Joseph Tipograph, Tipograph Law LLC, Washington, DC, Defendant-Appellant Cross Appellee.

Before Newsom, Marcus, Circuit Judges, and Middlebrooks, District Judge.*

Marcus, Circuit Judge:

AcryliCon USA, LLC ("AC-USA") and Silikal GmbH ("Silikal") have been fighting for years over a trade secret. This is their third trip to our Court. The last time they were before this Court, a panel erased some of the relief awarded to AC-USA after a jury trial. See AcryliCon USA, LLC v. Silikal GmbH , 985 F.3d 1350, 1374–75 (11th Cir. 2021) ( AcryliCon II ). Specifically, we reversed the district court's decision denying Silikal's motion for judgment as a matter of law on AC-USA's misappropriation of trade secrets claim and vacated the damages awarded to AC-USA on its breach of contract claim. Id. at 1366, 1374. In that opinion, we also concluded that the "permanent" injunction the district court had entered was, in fact, preliminary in nature (not permanent) and that it necessarily dissolved because the district court did not include it in the original final judgment. Id. at 1360 n.25.

We remanded the case to the district court to determine the appropriate amount of attorney's fees the prevailing party should receive. Id. at 1374. On remand, the district court basically entered the same amount of attorney's fees it had originally awarded. D.E. 575 at 3. The district court also entered a "permanent" injunction barring the use of the trade secret at issue, concluding that it was obliged to do so by our holding in AcryliCon I . D.E. 575 at 2; D.E. 589 at 2; see AcryliCon USA, LLC v. Silikal GmbH & Co. , 692 F. App'x 613, 617 (11th Cir. 2017) (per curiam) ( AcryliCon I ).

As we see it, the district court misread our holdings, including our unambiguous determination in AcryliCon II that no permanent injunction had been entered because the district court's original final judgment did not include one. See AcryliCon II , 985 F.3d at 1360 n.25. The district court could not simply "reenter" a permanent injunction against Silikal without first making the appropriate findings pursuant to Rule 65 of the Federal Rules of Civil Procedure. Fed. R. Civ. P. 65(d). We also conclude that the district court abused its discretion when it awarded AC-USA nearly its full attorney's fees even after we reversed, in AcryliCon II , significant portions of the relief AC-USA had been previously awarded.

We vacate and remand for further proceedings consistent with this opinion.

I.

This dispute began with the breach of a Global Settlement Agreement ("agreement") between two parties that shared a trade secret, AC-USA and Silikal. The trade secret consisted of the formula for 1061 SW, a flooring resin Silikal manufactured and sold. Under the agreement, AC-USA and its affiliate, AcryliCon International, Ltd. ("AC-International"), became Silikal's exclusive distributors of 1061 SW and Silikal could not sell the resin without AcryliCon's written permission. AcryliCon II , 985 F.3d at 1357–58.

AC-USA first sued Silikal in the Northern District of Georgia in 2014, alleging that Silikal breached the agreement by "manufacturing the 1061 SW resin, selling it on a global scale, and taking credit for AcryliCon Systems in its marketing." Id. at 1359. AC-USA moved for partial summary judgment on its contract claim, and for a permanent injunction barring Silikal from producing or selling 1061 SW. Id. at 1360. The district court granted AC-USA's motions and issued a permanent injunction against Silikal, in part because "[p]revious counsel for [Silikal] admitted ... at a status conference before [the District Court] that there have been sales of [1061 SW] in violation of the global settlement agreement" and that Silikal did not "dispute that there [had] been a breach of contract." Id. at 1360–61 (alterations in original) (quotation marks omitted).

Silikal then filed an interlocutory appeal challenging the entry of a permanent injunction. Silikal argued that the district court erred by (1) denying its motion to dismiss for lack of personal jurisdiction and (2) entering a permanent injunction. AcryliCon I , 692 F. App'x at 615. We declined to exercise our pendent appellate jurisdiction to consider Silikal's personal jurisdiction argument on interlocutory appeal. Id. Although we acknowledged that AC-USA did not follow the agreement's pre-suit notice provisions to perfection, we still upheld the injunction, characterizing it as both "preliminary" and "permanent" in nature at different points in the opinion. Id. at 617–18.

While AcryliCon I (which addressed primarily the district court's decision to exercise its equitable power and enter an injunction) was pending in this Court, the case went to trial before a jury on AC-USA's legal claims. Of the original seven claims, only two were submitted to the jury: the damages amount on the common law breach of contract claim and a misappropriation of trade secrets claim under the Georgia Trade Secrets Act of 1990.1 AcryliCon II , 985 F.3d at 1362. See GA. CODE ANN. §§ 10-1-760 – 767 (2020). A jury awarded AC-USA damages in the total amount of $1.5 million on each of the two claims, and the district court awarded AC-USA an additional $3 million in punitive damages on the misappropriation claim. AcryliCon II , 985 F.3d at 1362. The district court later denied Silikal's post-verdict motion for judgment as a matter of law on the misappropriation and contract claims and entered final judgment for AC-USA in the amount of $5,861,415 -- $4.5 million in damages and $1,361,415 in attorney's fees. Id. at 1363, 1368. Notably, the district court's final judgment did not include the entry of any injunctive relief. D.E. 449; AcryliCon II , 985 F.3d at 1360 n.25.

Silikal appealed the district court's judgment. Among other things, Silikal argued that the district court's $1.5 million damages judgment was only for the misappropriation claim and not for the contract claim. AC-USA disagreed, claiming that the judgment awarded the same total sum of $1.5 million for both the misappropriation and contract claims. Id. at 1363. Finding the judgment ambiguous, we issued a limited remand while retaining jurisdiction, instructing the district court to clarify its judgment. Id. The district court promptly entered a revised final judgment, which clarified that each claim was an independent ground for the $1.5 million award. D.E. 543.

Silikal appealed the trial court's revised final judgment, which resulted in our opinion in AcryliCon II . We reached four conclusions relevant to this (the third) appeal. First , the Court held that AC-USA failed, as a matter of law, to prove its misappropriation claim and, therefore, reversed the district court's judgment entered in favor of AC-USA on that count. AC-USA could not establish that Silikal misappropriated the trade secrets because, under Georgia law, the secret must have been acquired under circumstances giving rise to a duty to maintain its secrecy. Id. at 1367. At most, the evidence showed that Silikal owed such a duty to AC-International, but not to the party-plaintiff in the case, AC-USA. Id.

Second , we reversed the district court's judgment that the $1.5 million damage award could be sustained by the jury's verdict on the contract claim once we reversed the district court on the misappropriation claim. We held that, as a matter of law, AC-USA had failed to prove actual damages on its consequential damages theory. Id. at 1370. AC-USA could, however, recover nominal damages because Silikal did breach the contract. Id. at 1368. At this point, only a nominal damages award and attorney's fees remained.

Third , we concluded that AC-USA is entitled to attorney's fees on its breach of contract claim notwithstanding that it failed to prove actual damages because, under Georgia law, even a nominal damages award would still materially alter the legal relationship between the parties, so that AC-USA was the "prevailing party." Id. at 1375. We vacated the $1,361,415 attorney's fees award, however, and remanded the case to the district court for determination of an appropriate attorney's fee consistent with the opinion. Id.

Finally , we held that the "permanent" injunction issued by the district court and affirmed by this Court earlier in the case was actually preliminary in nature and had "dissolved" when the district court did not include a permanent injunction in its final judgment. Id. at 1360 n.25. We remanded the case to the district court "for a determination of the sum of nominal damages and attorney's fees to which AC-USA is entitled." Id. at 1375.

On remand, the district court explained that it understood AcryliCon II this way: "Although the Eleventh Circuit vacated the judgment under the Georgia Trade Secrets Act, this did not disturb this Court's finding that AcryliCon was also entitled to recover its attorneys’ fees and costs under the Global Settlement Agreement." D.E. 575 at 3. Notwithstanding that we directed that judgment be entered for Silikal on the misappropriation claim and held that AC-USA could not prove actual damages on its breach of contract claim as a matter of law, the district court awarded nearly the same amount of attorney's fees on remand, subtracting...

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