Protostorm, LLC v. Antonelli, Terry, Stout & Kraus, LLP

• Decision Date: 05 June 2015
• Docket Number: 08-CV-931 (PKC) (JO)
• Court: U.S. District Court — Eastern District of New York
• Parties: PROTOSTORM, LLC and PETER FAULISI, Plaintiffs, v. ANTONELLI, TERRY, STOUT & KRAUS, LLP, FREDERICK D. BAILEY, CARL I. BRUNDIDGE, and ALAN E. SCHIAVELLI, Defendants.

PROTOSTORM, LLC and PETER FAULISI, Plaintiffs, v. ANTONELLI, TERRY, STOUT & KRAUS, LLP, FREDERICK D. BAILEY,CARL I. BRUNDIDGE, and ALAN E. SCHIAVELLI, Defendants.

08-CV-931 (PKC) (JO)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

June 5, 2015

MEMORANDUM & ORDER

PAMELA K. CHEN, United States District Judge:

Plaintiffs Protostorm, LLC ("Protostorm") and Peter Faulisi ("Faulisi") filed the present action on March 4, 2008, alleging that defendant Antonelli, Terry, Stout & Krauss, LLP ("ATS&K") and individual defendants Frederick D. Bailey ("Bailey"), Carl I. Brundidge ("Brundidge"), and Alan E. Schiavelli ("Schaivelli") committed legal malpractice in connection with Protostorm's patent application. (Dkt. 1.) A jury trial was held between July and August 2014, and a verdict was rendered on August 15, 2014 for Protostorm against ATS&K, Bailey, and Brundidge. (Dkts. 532, 534 at 28-33 ("Verdict Sheet").) On February 6, 2015, an Amended Judgment in Protostorm's favor was issued against ATS&K in the amount of $6,696,000 in compensatory damages, $900,000 in punitive damages, and $1,050,720.60 in prejudgment interest, and against Brundidge in the amount of $100,000 in punitive damages. (Dkt. 639.) The Court, however, stayed enforcement of the judgment until the resolution of the instant motions. (Dkts. 612, 619.)

Pending before the Court are motions to set aside the jury verdict pursuant to Federal Rule of Civil Procedure 50(b) filed by ATS&K, Brundidge, and Bailey (collectively,"Defendants"). (Dkts. 626, 627, 645).¹ For the reasons set forth below, Defendants' Rule 50(b) motions are denied.

BACKGROUND

The Court assumes the parties' familiarity with the background of this case. See, e.g., Protostorm, LLC v. Antonelli, Terry, Stout & Kraus, LLP, 834 F. Supp. 2d 141 (E.D.N.Y. 2011). Only those facts necessary for disposition of the instant motions will be set forth herein as part of the Discussion section.

I. Trial, Verdict, and Judgment

Trial in this matter began on July 28, 2014. (See Dkts. 507-11, 513, 516, 518, 524-28, 530, 532.) On August 15, 2014, the jury returned a verdict for Protostorm against ATS&K, Brundidge, and Bailey for legal malpractice. (Verdict Sheet at 1-2.)² The jury, however, did not find that Plaintiffs had established by a preponderance of the evidence that an attorney-client relationship existed between ATS&K and Faulisi, or that an attorney-client relationship persisted between Protostorm and Schiavelli of ATS&K after September 2001. (Id.) Accordingly, Faulisi and Schiavelli are not parties to the instant post-trial motions.

The jury awarded Protostorm $6,975,000 in compensatory damages, apportioning 75% of the fault to ATS&K, 15% to Brundidge, 6% to Bailey, and 4% to Protostorm. (Id. at 5.) The jury also awarded Protostorm punitive damages in the amount of $900,000 against ATS&K and $100,000 against Brundidge. (Id. at 5-6.)

Following post-trial briefing on the allocation of damages, the Court assigned all compensatory damages to ATS&K for the acts of its attorneys, including Schiavelli, Brundidge, and Bailey, and reduced the amount of compensatory damages based on the jury's findings that Protostorm was 4% at fault. (Dkts. 565 at 9-10, 610 at 3.) The Court accordingly entered judgment for Protostorm against ATS&K in the amount of $6,696,000 in compensatory damages and $900,000 in punitive damages, and against Brundidge in the amount of $100,000 in punitive damages. (Dkt. 611.) ATS&K was also assessed $1,050,720.60 in pre-judgment interest as part of the final judgment. (Dkt. 639.)

II. Defendants' Rule 50(b) Motions

ATS&K's Rule 50(b) motion asserts that Protostorm failed to establish at trial proximate cause because its invention was unpatentable under 35 U.S.C. §§ 101 and 103. (ATS&K Mem. at 10, 24.) ATS&K further asserts that Protostorm failed to prove damages or show that ATS&K had a duty to draft the hypothetical claims prepared by Protostorm's expert, Irving Rappaport ("Rappaport"). (Id. at 18, 26.) In addition, ATS&K contends that the evidence was insufficient to show that an attorney-client relationship persisted between ATS&K and Protostorm after March 4, 2005 (three years before Protostorm commenced this action) and that the action was thus timely, and that an award of punitive damages was justified. (Id. at 31, 35.)

Brundidge's Rule 50(b) motion challenges the sufficiency of the evidence with respect to the tolling of the statute of limitations as to him through August 25, 2006, the date he was added as a defendant in the Second Amended Complaint. (Dkt. 645-1 ("Brundidge Mem.") at 6.) Brundidge also contends that the record does not support his individual liability for malpractice because Protostorm failed to make a showing that Brundidge was individually responsible for prosecuting the patent application and that his representation continued to the national phase of patent prosecution after September 2001. (Id. at 12, 13.) Brundidge further asserts that anybreach of duty to Protostorm did not cause ascertainable damages. (Id. at 15, 17.) Finally, Brundidge argues that there was no basis for the jury's award of punitive damages against him individually. (Id. at 19.) Throughout his motion papers, Brundidge claims that the jury made factual findings based on the collective actions of ATS&K's lawyers, not Brundidge individually. (E.g., id. at 7 n.2, 10, 11 n.3; Dkt. 654 ("Brundidge Reply") at 1.)

Bailey joins in ATS&K's Rule 50(b) motion in its entirety (Dkt. 626-1 ¶ 6) and also in the portion of Brundidge's motion that relates to the statute of limitations defense (id. ¶ 7).

DISCUSSION

III. Legal Standard

Federal Rule of Civil Procedure 50 sets forth the procedural requirements for challenging the sufficiency of the evidence in a civil jury trial and establishes two stages for such challenges: prior to submission of the case to the jury under Rule 50(a), and after the verdict and entry of judgment under Rule 50(b). Unitherm Food Sys., Inc. v. Swift-Eckrich, Inc., 546 U.S. 394, 399-400 (2006). Under Rule 50(b), if a jury returns a verdict for which there is not a legally sufficient evidentiary basis, the Court may either order a new trial or direct the entry of judgment as a matter of law. Fed. R. Civ. P. 50(b); Welch v. United Parcel Serv., Inc., 871 F. Supp. 2d 164, 172 (E.D.N.Y. 2012).

A Rule 50 motion "'may only be granted if there exists such a complete absence of evidence supporting the verdict that the jury's findings could only have been the result of sheer surmise and conjecture, or the evidence in favor of the movant is so overwhelming that reasonable and fair-minded [persons] could not arrive at a verdict against [it].'" Kinneary v. City of New York, 601 F.3d 151, 155 (2d Cir. 2010) (quoting Brady v. Wal-Mart Stores, Inc., 531 F.3d 127, 133 (2d Cir. 2008)) (alterations in original). The issue on a Rule 50 motion is whether "'the evidence is such that, without weighing the credibility of the witnesses orotherwise considering the weight of the evidence, there can be but one conclusion as to the verdict that reasonable [persons] could have reached.'" This is Me, Inc. v. Taylor, 157 F.3d 139, 142 (2d Cir. 1998) (quoting Cruz v. Local Union No. 3, Int'l Bhd. of Elec. Workers, 34 F.3d 1148, 1154-55 (2d Cir. 1994)) (alterations in original); see Caruolo v. John Crane, Inc., 226 F.3d 46, 51 (2d Cir. 2000) (the court may not decide a Rule 50 motion by evaluating the credibility of witnesses or the relative weight of the evidence). "Weakness of the evidence does not justify judgment as a matter of law; as in the case of a grant of summary judgment, the evidence must be such that 'a reasonable juror would have been compelled to accept the view of the moving party.'" This is Me, 157 F.3d at 142 (quoting Piesco v. Koch, 12 F.3d 332, 343 (2d Cir. 1993)).

When ruling on a Rule 50(b) motion, "[a] court 'must give deference to all credibility determinations and reasonable inferences of the jury[.]'" Caruolo, 226 F.3d at 51 (quoting Galdieri-Ambrosini v. Nat'l Realty & Dev. Corp., 136 F.3d 276, 289 (2d Cir. 1998)); see also Concerned Area Residents for the Env't v. Southview Farm, 34 F.3d 114, 117 (2d Cir. 1994) (the court must "'consider the evidence in the light most favorable to the [non moving party] and . . . give that party the benefit of all reasonable inferences that the jury might have drawn in [its] favor from the evidence'") (quoting Smith v. Lightning Bolt Prods., Inc., 861 F.2d 363, 367 (2d Cir. 1988)) (alterations in original). As the Supreme Court has explained, "although the court should review the record as a whole, it must disregard all evidence favorable to the moving party that the jury is not required to believe." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 151 (2000); Meloff v. New York Life Ins. Co., 240 F.3d 138, 145 (2d Cir. 2001). Thus, a movant seeking to set aside a jury verdict faces "a high bar," Lavin-McEleney v. Marist College, 239 F.3d 476, 479 (2d Cir. 2001), and such motions "should be granted cautiously andsparingly" Welch, 871 F. Supp. at 173 (quoting 9A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 2524, at 252 (1995)); see Japan Airlines Co. Ltd. v. Port Auth. of New York & New Jersey, 178 F.3d 103, 112 (2d Cir. 1999).

IV. Whether Defendants' Rule 50(b) Arguments Were Properly Preserved

Rule 50(a) provides that a motion for judgment as a matter of law made before the case is submitted to the jury "shall specify . . . the facts that entitle the movant to the judgment." Fed. R. Civ. P. 50(a)(2). A post-trial Rule 50(b) motion is properly made only if a Rule 50(a) motion has been made before submission of the case to the jury. Bracey v. Bd. of Ed. of City of Bridgeport, 368 F.3d 108, 117 (2d Cir. 2004). Because a motion pursuant to Rule 50(b) "is in reality a renewal of a motion" pursuant to Rule 50(a), Lambert v. Genesee Hosp., 10 F.3d 46, 53-54 (2d Cir. 1993) (citation omitted), the grounds on which a party...