VKGS, LLC v. Planet Bingo, LLC
| Decision Date | 13 August 2021 |
| Docket Number | No. S-20-125.,S-20-125. |
| Citation | 309 Neb. 950,962 N.W.2d 909 |
| Parties | VKGS, LLC, doing business as Video King, a Delaware limited liability company, appellant and cross-appellee, v. PLANET BINGO, LLC, a California limited liability company, and Melange Computer Services, Inc., a Michigan corporation, appellees and cross-appellants. |
| Court | Nebraska Supreme Court |
Paul J. Gardner, Omaha, B. Scott Eidson, J. Nicci Warr, and Julie Scheipeter, of Stinson, L.L.P., for appellant.
Patrick R. Guinan, of Erickson & Sederstrom, P.C., Omaha, Steven Z. Cohen and Aaron E. Silvenis, of Cohen, Lerner & Rabinovitz, P.C., and Nicholas F. Sullivan, Omaha, of Dvorak Law Group, L.L.C., for appellees.
Funke, J. VKGS, LLC, and Planet Bingo, LLC, competitors in the bingo hall gaming industry, sued each other for breach of contract. In the trial on VKGS’ claims, the jury found Planet Bingo and its wholly owned subsidiary, Melange Computer Services, Inc. (Melange), liable for $558,405. In a separate trial on Planet Bingo and Melange's claims, the jury found VKGS liable for $2,990,000. The court awarded VKGS postjudgment interest from the time of the first verdict, and it then entered judgment in favor of Planet Bingo and Melange, while offsetting VKGS’ award.
VKGS appeals, arguing that the court should have dismissed Planet Bingo and Melange's claims rather than bifurcate and continue trial and that the court should not have ruled evidence inadmissible or refused jury instructions. For reasons we explain, VKGS’ appeal is without merit.
Planet Bingo and Melange cross-appeal, arguing that the court should not have awarded VKGS postjudgment interest. Planet Bingo and Melange's cross-appeal has merit. Therefore, we affirm in part, and in part reverse and remand with directions to modify the judgment in accordance with this opinion.
VKGS is a Delaware limited liability company with its principal place of business in Omaha, Nebraska. Planet Bingo is a foreign limited liability company doing business in Nebraska. Melange was a software development company which ultimately became a wholly owned subsidiary of Planet Bingo. Melange is a Michigan corporation doing business in Nebraska.
The dispute in this case involves bingo software. The case has a complex procedural history. Background facts have previously been set forth by this court and other courts.1 Summarized, Melange developed a leading bingo hall management and electronic gaming software called EPIC. The parties maintained a contractual business relationship from approximately 2003 through 2012, which as of 2005 was protected by an extensive confidentiality provision drafted by VKGS. The parties explored a potential merger, which ultimately failed. Eventually, after acquiring Melange, Planet Bingo and Melange (hereinafter collectively Planet Bingo) alleged that VKGS was in violation of contract by misusing confidential information taken from EPIC to develop a competing software program called OMNI. VKGS in turn alleged that Planet Bingo breached contractual obligations and tortiously interfered with business relations by using pricing information and disparagement to influence customers. Two separate jury trials ensued.
Trial on the parties’ claims began on August 20, 2018. Originally, both parties were to present their claims during the first trial. However, a need to bifurcate the parties’ claims arose due to questioning by VKGS during its case in chief on the sixth day of trial. VKGS asked William Wei, the former president of Melange, about the source code for EPIC and "VIPick'em," a bingo game played using EPIC. Wei testified that he believed that the EPIC source code and the VIPick'em source code were confidential. VKGS asked, "[Y]ou would never put any of that source code on the Internet, would you?" To which Wei answered, "No." VKGS then asked if Wei filed a VIPick'em patent in Canada. Wei answered, "That, I don't know."
VKGS attempted to impeach Wei through the use of an exhibit, which was a copy of a file from the Canadian patent office, which VKGS had obtained from the internet that day. The file included a 2001 Canadian patent application for VIPick'em, with 158 pages of alleged source code. In addition, the exhibit included an assignment signed by Wei regarding Melange's rights to the Canadian patent application. Wei admitted that he had signed the assignment, but did not remember having the document filed, could not identify the document, and stated, "I have no knowledge of this."
Planet Bingo objected, arguing that VKGS had failed to lay foundation and had failed to disclose the document as a trial exhibit, in violation of pretrial orders. After several hours of argument outside the presence of the jury, the court determined that the patent application could not be admitted in VKGS’ case in chief, because the exhibit lacked foundation, was not authenticated, and was not relevant to VKGS’ claims. The court found that Wei was being truthful in stating that he did not recognize the document, that the exhibit was not a certified copy, and that no witness established the extent to which the exhibit was in fact VIPick'em source code, or whether the copy was in fact an official document publicly available on the internet. VKGS argued the exhibit could be used to impeach Wei, but the court found there was no foundation for purposes of impeachment. The court found that the exhibit was not relevant, that any relevance was substantially outweighed by unfair prejudice, and that the issue was "too much of a surprise" and should have been known months earlier. The court stated that it would allow the evidence during Planet Bingo's case. Planet Bingo requested time to have an expert compare the source code with EPIC before presenting its claims.
In turn, VKGS moved for dismissal of Planet Bingo's claims, arguing that the claims lacked adequate investigation and were not viable going forward. The court denied VKGS’ motion. In the alternative, VKGS asked the court to "sever" the claims so as to allow VKGS to proceed separately with submission of its claims to the jury. VKGS argued that "the only appropriate action here is to sever the claims, create two different cases, allow Planet Bingo to then decide what they want to do with their claims, if anything." VKGS stated, "[W]e do believe that if you would prefer to bifurcate ... that would also be a way that would prevent extreme prejudice against [VKGS] while preserving Planet Bingo's right to go forward with their claims." The court overruled VKGS’ motion to "sever," and then proceeded to bifurcate the trial. Trial continued on VKGS’ claims only.
At the jury instruction conference, the court refused VKGS’ proffered instruction regarding the implied contractual duty of good faith and fair dealing. After closing arguments, on September 7, 2018, the jury found in favor of VKGS and against Planet Bingo for breach of contract in the amount of $558,405. The jury rejected VKGS’ other breach of contract and tortious interference claims. The court entered an order on the verdict on September 13, 2018. The court found under Neb. Rev. Stat. § 25-1315 (Reissue 2016) that the order was not final for purposes of appeal until all claims had been adjudicated on the merits.
Trial on Planet Bingo's claims commenced on June 12, 2019. Planet Bingo presented evidence to the jury showing that VKGS violated the confidentiality provision of the parties’ contract by reverse engineering EPIC to develop OMNI. During OMNI's development process, VKGS personnel admitted in emails that they reverse engineered EPIC in order to understand the software, and they were on record stating, " ‘When in doubt, copy EPIC.’ " The court rejected VKGS’ proffered jury instructions regarding Planet Bingo's breach of contract claims. The jury found VKGS liable to Planet Bingo for breach of contract in the amount of $2,990,000, but rejected Planet Bingo's misappropriation of trade secret claim and other claims.
The court awarded VKGS postjudgment interest dating back to the order on the first verdict. The court then entered judgment in favor of Planet Bingo while offsetting the award to VKGS.
VKGS appealed. Planet Bingo filed a cross-appeal.
VKGS assigns, restated and summarized, that the district court erred in (1) bifurcating trial rather than dismissing Planet Bingo's claims, (2) refusing to admit evidence, and (3) refusing proposed jury instructions.
Planet Bingo assigns on cross-appeal that the district court erred in awarding VKGS postjudgment interest.
Because authentication rulings are necessarily fact specific, a trial court has discretion to determine whether evidence has been properly authenticated.2 An appellate court reviews the trial court's ruling on authentication for abuse of discretion.3 A judicial abuse of discretion exists if the reasons or rulings of a trial judge are clearly untenable, unfairly depriving a litigant of a substantial right and denying just results in matters submitted for disposition.4
A trial court's decision to bifurcate claims for purposes of trial is reviewed for abuse of discretion.5
A trial court has the discretion to determine the relevancy and admissibility of evidence, and such determinations will not be disturbed on appeal unless they constitute an abuse of that discretion.6 Apart from rulings under the residual hearsay exception, an appellate court reviews for clear error the factual findings underpinning a trial court's hearsay ruling and reviews de novo the court's ultimate determination to admit evidence over a hearsay objection or exclude evidence on hearsay grounds.7 In a civil case, the admission or exclusion of evidence is not reversible error unless it unfairly prejudiced a substantial right of the complaining party.8
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