Hinz v. Neuroscience, Inc.

Citation538 F.3d 979
Decision Date22 August 2008
Docket NumberNo. 07-2699.,No. 07-2694.,07-2694.,07-2699.
PartiesDr. Martin HINZ; Neuroresearch Clinics, Inc., Appellants/Cross-Appellees v. NEUROSCIENCE, INC.; Gottfried Kellermann, Appellees/Cross-Appellants.
CourtU.S. Court of Appeals — Eighth Circuit

Aaron Wayne Davis, argued, Eric H. Chadwick, Brian L. Stender, on the brief, Minneapolis, MN, for appellants/cross-appellees.

Carl S. Wosmek, argued, Henry M. Helgin, III, Corey J. Ayling, on the brief, Minneapolis, MN, for appellees/cross-appellants.

Before GRUENDER, BALDOCK,1 and BENTON, Circuit Judges.

BENTON, Circuit Judge.

In this diversity case, Dr. Martin Hinz and Neuroresearch Clinics, Inc. (collectively "Hinz") sued Neuroscience, Inc. and Gottfried Kellermann (collectively "Kellermann") for breach of contract. A jury returned a verdict for Hinz, awarding $1,989,373 in damages. The district court2 reversed the damage award on Kellermann's motion for judgment as a matter of law. The court denied Hinz's motions for permanent injunction, pre- and post-judgment interest, and attorney's fees and costs. Hinz appeals. Kellermann cross appeals, claiming the court erred in allowing parol evidence to interpret the contract. Having jurisdiction under 28 U.S.C. § 1291, this court affirms.

I.

Hinz developed the D5 product series, including D5, D5 Extra, and D5 Mucuna to treat neurotransmitter dysfunction. The primary ingredient in D5 Mucuna was Mucuna pruriens; the primary ingredients in D5 were L-Dopa (from standardized Mucuna pruriens) and 5-HTP.

Hinz and Kellermann reached a Joint Working Agreement on October 14, 2001. The agreement permitted Kellermann to distribute Hinz's products in exchange for paying Hinz a royalty rate of 43 percent per product.

In August 2002, Hinz and Kellermann created Neuroscience, Inc. to develop and sell amino acid supplement products. Neuroscience distributed and marketed Hinz's products, including D5 and D5 Mucuna. Neuroscience agreed to pay Hinz a royalty rate and salary, in addition to business expenses. On November 30, 2002, Kellermann terminated the joint business relationship. Kellermann stayed with Neuroscience, while Hinz started Neuroresearch Clinics, Inc. Within weeks, Neuroscience contacted all the customers in its database to persuade them to stay with it. About 80 percent of the customers were contacts brought to Neuroscience by Hinz, while the remaining 20 percent were contacts Hinz and Kellermann established together. After the split, Neuroscience sold Hinz's products, without paying him a royalty rate.

In January 2003, Kellermann sued Hinz; Hinz countersued. The dispute was settled during a court-mediated settlement conference on May 23, 2003. The settlement was memorialized in a written agreement. As relevant, the agreement, effective September 1, 2003, required Kellermann to:

"permanently discontinue the promotion, sale and use of the following tradenames, trademarks and products using said tradenames and trademarks: Cysreplete, NeuroReplete, RepleteExtra, D5, D5 Extra, D5 Mucuna, The Replete Program, and L-tyrosine in combination with 5-HTP,"

"permanently discontinue the promotion, marketing and sale of the D5 product series," and

"make no further use of any trademarks and amino acid formulations specifically prohibited by this agreement for which [Hinz] had been paid royalties in the past."

Four months later, Hinz sued Kellermann for breach of the settlement agreement, alleging Kellermann was selling products containing the ingredients Mucuna pruriens and Mucuna pruriens in combination with 5-HTP. Before trial, the district court ruled that the settlement agreement was ambiguous on its face. It permitted Hinz and Kellermann to introduce parol evidence to interpret the terms of the contract. The jury found a breach of contract, awarding $1,989,373 in lost-profit damages.

After trial, Kellermann moved for judgment as a matter of law, or alternatively a new trial under Rule 50(b) of the Federal Rules of Civil Procedure. The district court granted judgment as a matter of law on damages, concluding Hinz provided no reasonable basis for the calculation of damages. However, the court denied Kellermann's motion for new trial, ruling it untimely. The court also denied Hinz's motions for permanent injunction, pre- and post-judgment interest, and attorney's fees and costs. Hinz appeals, contending the district court erred in (1) reversing the damage award because it lacked jurisdiction; (2) concluding there was insufficient evidence for the damage award; (3) instructing the jury on the measure of damages; and (4) denying Hinz a permanent injunction, pre- and post-judgment interest, and attorney's fees and costs. Kellermann cross-appeals, objecting to the use of parol evidence.

II.

Hinz argues Kellermann failed to comply with the "particularity" requirement of Rule 7(b) of the Federal Rules of Civil Procedure in his post-verdict motion. Hinz thus concludes the district court lacked jurisdiction to enter the amended judgment reversing the damage award.

At the close of evidence, Kellermann moved for judgment as a matter of law, explaining orally the basis for the motion. See Fed.R.Civ.P. 50(a). Specifically, he disagreed with the use of parol evidence and claimed there was insufficient evidence to prove damages. Post-verdict, Kellermann renewed his motion, stating simply: "we would like to renew our Rule 50 motion for judgment as a matter of law." See Fed.R.Civ.P. 50(b). Exactly ten days after trial, Kellermann filed motions for judgment as a matter of law, and alternatively a new trial. See id. The post-verdict motions did not describe the grounds on which they were based. The next day, however, Kellermann filed a supporting memorandum detailing the grounds for the motions. Kellermann attacked the verdict, the use of parol evidence, and other "irrelevant and prejudicial" evidence. The district court ruled that for the issues of damages and parol evidence the motions were timely and stated with particularity. For the issue of irrelevant and prejudicial evidence, the motion was untimely.

Because the dispute involves the legal jurisdiction of the court, this court reviews de novo. See Andreas v. Volkswagen of Am., Inc., 336 F.3d 789, 793 (8th Cir.2003).

"Rule 7 is a general rule that applies to all motions." Id. It requires a request for a court order to be made by motion, which shall (1) be in writing, unless made during a hearing or a trial, (2) state with particularity the grounds for seeking the order, and (3) state the relief sought. Fed.R.Civ.P. 7(b). The particularity requirement gives notice to the court and the opposing party, providing the opposing party "a meaningful opportunity to respond and the court with enough information to process the motion correctly." Andreas, 336 F.3d at 793. However, the particularity requirement "should not be applied in an overly technical fashion when the purpose behind the rule is not jeopardized." Id. The court may consider closely-filed motions to determine if notice was properly given and the opposing party had an opportunity to respond. See id. The court may not consider, though, filings after the filing period "because to do so would allow parties to eviscerate the purpose of the time limitation." Id. at 794. See Alternate Fuels, Inc. v. Cabanas, No. 06-3794/07-1462, 2008 WL 3822561 at *2-3 (8th Cir. Aug 18, 2008).

Here, the district court looked to the Rule 50(a) motion to determine whether the Rule 50(b) motion was adequate. The court did not consider the supporting memorandum, though, finding it untimely.

As for the supporting memorandum, a renewed (or post-verdict) motion for judgment as a matter of law must be filed "no later than ten days after the entry of judgment." See Fed.R.Civ.P. 50(b). Because the supporting memorandum here was filed after the 10-day limit, this court may not consider it. See Andreas, 336 F.3d at 794.

As for the district court's consideration of the Rule 50(a) motion, the court did not err. "By definition, a Rule 50(b) motion is a renewal of a prior Rule 50(a) motion made at the close of the evidence and as such is limited to those issues raised in the previous motion." Id., citing Fed.R.Civ.P. 50(b); see also Conseco Fin. Servicing Corp. v. N. Am. Mortgage, Co., 381 F.3d 811, 821 (8th Cir.2004) ("The grounds for the renewed motion under Rule 50(b) are limited to those asserted in the earlier Rule 50(a) motion."). Kellermann's Rule 50(a) motion attacked the use of parol evidence and the damage evidence. The trial transcript indicates Kellermann made the motion during the trial, particularly stating its grounds and the relief sought. See Fed.R.Civ.P. 7(b). Kellerman provided the district court and Hinz with notice, and Hinz had a fair opportunity to respond. Because the Rule 50(a) motion satisfied the particularity requirement, the Rule 50(b) motion was also sufficient. See Andreas, 336 F.3d at 794; see also Conseco, 381 F.3d at 821 ("If colloquy between counsel and the trial court fleshes out the motion, it may provide the opposing party with the requisite notice.").

The district court had jurisdiction to enter an amended judgment reversing the damage award.

III.

Applying the same standard as the district court, this court reviews the grant of judgment as a matter of law de novo, viewing the evidence most favorably to the nonmoving party and drawing all reasonable inferences in its favor. Liberty Mut. Fire Ins. Co. v. Scott, 486 F.3d 418, 422 (8th Cir.2007). "If the evidence viewed according to this standard would permit reasonable jurors to differ in the conclusions they draw, judgment as a matter of law cannot be granted." Id., quoting Matrix Group Ltd., Inc. v. Rawlings Sporting Goods Co., 477 F.3d 583, 593 (8th Cir.2007). However, "when the record contains no proof beyond speculation to support the verdict, then judgment as a matter of law is appropriate." Liberty Mut., 486 F.3d at...

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