Contract Materials Processing, v. Kataleuna GmbH Catalyst

Filing

UNPUBLISHED PER CURIAM OPINION filed. Originating case number: 1:98-cv-00147-AMD Copies to all parties and the district court/agency. [998777760].. [10-1497]

Appeal: 10-1497

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Date Filed: 02/01/2012

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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 10-1497

CONTRACT MATERIALS PROCESSING, INCORPORATED,
Plaintiff – Appellant,
v.
KATALEUNA GMBH CATALYSTS; TRICAT MANAGEMENT GMBH; SUD CHEMIE
ZEOLITES GMBH, f/k/a Tricat Catalytic Products GmbH,
Defendants – Appellees.

Appeal from the United States District Court for the District of
Maryland, at Baltimore. Andre M. Davis, District Judge. (1:98cv-00147-AMD)

Argued:

October 26, 2011

Decided:

February 1, 2012

Before KING, GREGORY, and WYNN, Circuit Judges.

Affirmed by unpublished per curiam opinion.

ARGUED: Paul Stone Richter, RICHTER, MILLER & FINN, Washington,
D.C., for Appellant.
Barbara Susan Wahl, ARENT FOX, LLP,
Washington, D.C., for Appellees.
ON BRIEF: Thomas P. Miller,
RICHTER, MILLER & FINN, Washington, D.C., for Appellant.
Randall A. Brater, Karen E. Carr, ARENT FOX, LLP, Washington,
D.C., for Appellees.

Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:
On March 30, 2010, a litigation saga spanning more than
twelve years in the District of Maryland finally came to an end
with the entry of a Final Order and Judgment (the “Judgment”) on
behalf

of

Management

KataLeuna
GmbH

GmbH

(“TMG”),

Catalysts

and

Tricat

(“KataLeuna”),
Catalytic

(“TCP”) (collectively, the “Defendants”).
$4,726,518.81

to

KataLeuna

on

its

four

Tricat

Products

GmbH

The Judgment awarded
counterclaims

against

Plaintiff Contract Materials Processing, Inc. (“CMP”), net of
two claims on which CMP prevailed.
certain
that

interlocutory

CMP

pay

rulings

$202,469.26

in

CMP appeals the Judgment and

incorporated
attorney

fees

within,
and

including

interest

KataLeuna, along with discovery sanctions of $27,654.30.

to
We

affirm in all respects.

I.
CMP,

principally

operating

out

of

Baltimore,

was

incorporated in 1987 by Dr. Edwin Albers, its president and sole
shareholder, to develop chemical and petrochemical products and
to provide analytical, research, and consulting services.

By

1992, CMP had begun to produce and sell Fluid Cracking Catalyst
(“FCC”) additives, which are used in the refining process to
promote the “cracking,” or chemical transformation, of crude oil
into lighter products such as gasoline and diesel fuel.
2

In

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early

Document: 69

1995,

Dr.

Date Filed: 02/01/2012

Albers

entered

Page: 3 of 39

into

discussions

with

Dr.

P.

Kenerick Maher of Tricat Industries, Inc. (“TII”), concerning a
trio of additives that CMP was developing and for which it had
(1) “SOx A,” designed to reduce

submitted patent applications:
sulfur

emissions

from

the

refining

process;

(2)

“Combustion

Promoter B,” a cobalt-based version of Mobil’s platinum-based
progenitor,

intended

to

facilitate

the

combustion

of

carbon

monoxide into CO2; and (3) “Octane Enhancer B.”
TII was the American parent and sole shareholder of TMG, a
German

holding

company

managed

by

Maher.

In

May

1995,

TMG

acquired 74.8% of KataLeuna, with the remaining 25.2% retained
by

the

Bundesanstalt

für

vereinigungsbedingte

Sonderaufgabe

(“BvS”), a governmental agency overseeing the privatization of
former East German enterprises.

Maher’s negotiations with Dr.

Albers resulted in the execution of a Sales Agency Agreement
(“SAA”) and a Research and Development Agreement (“RDA”) between
CMP

and

KataLeuna,

and

of

a

Technology

Transfer

Agreement

(“TTA”) among the same corporate entities, Dr. Albers, and J.
Gary

McDaniel,

a

key

CMP

employee

familiar

with

its

FCC

operations.
Under the terms of the TTA, effective November 27, 1995,
CMP agreed to transfer to KataLeuna its “entire right, title and
interest” in the additives.

In return, KataLeuna agreed to pay

$2.1 million, transfer five thousand shares of non-voting TII
3

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stock

(having

a

Date Filed: 02/01/2012

stipulated

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value

of

$75,000),

and

remit

royalties to CMP amounting to 20% of KataLeuna’s gross margin
realized from the manufacture and sale of the FCC additives, up
to a maximum of $7.6 million.
catalyst

business,

and

its

KataLeuna had long been in the

acquisition

of

the

FCC

additive

technology developed by CMP was part of a plan to expand its
product line, another component being the construction of a new
manufacturing and processing plant in Leuna, Germany.

The TTA

included the warranties of CMP and the individual signatories
that

KataLeuna

could

applications,

that

violated

rely

existing

no

delivered

to

the

KataLeuna

on

any

technology
patents,

statements
had

that

“demonstrating

not
the
the

in

been

the

patent

patented

reports

and

previously

viability

and

the

reliability of the Combustion Promoter B” technology were “true,
complete and correct,” and that the technology was “new, useful
and unobvious.”
The

TTA

J.A. 98-99. 1
also

provided

for

the

transfer

of

McDaniel’s

employment from CMP to KataLeuna, and it required the delivery
of

the

fully

executed

RDA,

whereby

Dr.

Albers

would

devote

approximately one-third of his time for one year to further test
and develop the FCC additives in order to perfect and expand

1

Citations herein to “J.A. ___” refer to the contents of
the Joint Appendix filed by the parties to this appeal.

4

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their uses.

Date Filed: 02/01/2012

Page: 5 of 39

In exchange, KataLeuna agreed to pay CMP $400,000

in equal quarterly installments.

The SAA, predating both the

RDA and the TTA, appointed CMP as KataLeuna’s exclusive North
American agent for the sale of smaller quantities of zeolites
(absorbent minerals used in the catalytic process).

CMP agreed

thereunder to store and sell KataLeuna’s zeolites on consignment
in exchange for a commission on net sales; to defray CMP’s sales
and marketing expenses, KataLeuna covenanted to pay CMP $240,000
annually in equal monthly installments.
In October 1996, notwithstanding the efforts of Dr. Albers
to

perfect

SOx A,

it

became

obvious

to

KataLeuna

that

compound was not working as the parties had anticipated.
hoped-for

chemical

synergy

between

the

hydrotalcite

and

the
The
zinc

titanate components had not developed, owing to the relative
ineffectiveness of the latter.

The outcome was consistent with

tests performed in 1994 on prior versions of the compound by Dr.
Raghubir Gupta of the Research Triangle Institute.

Dr. Gupta,

who conducted the testing at the request of Dr. Albers, had been
skeptical of the compound’s efficacy from the outset, given the
chemical

reality

that

particles

useful

for

removing

hydrogen

sulfide are generally ineffective to also remove sulfur dioxide.
According to Dr. Gupta, it was “very, very well-known that zinc
oxide is an excellent H2S removal.

So from common sense normally

it will not work for SO2 removal.”

J.A. 1806.

5

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CMP had also conducted preliminary testing on Combustion
Promoter B, with inconclusive results.

Another test was run in

late 1996 after KataLeuna had taken ownership, but, absent full
saturation of the cobalt-based compound in the FCC unit, i.e.,
complete displacement of the platinum-based promoter, it could
not

be

conclusively

determined

effective.

McDaniel

temperature

had

was

whether

optimistic,

remained

fairly

CMP’s

in

steady

that

invention
the

was

processing

throughout,

but

the

owners of the unit were so unimpressed that they purchased no
more of the compound.

Then, at a full-saturation test in August

1997, after Mobil’s promoter had to be reintroduced to the unit
to control rapidly rising temperatures, it became apparent that
Combustion
testing

Promoter

by

a

B

was

Dutch

generally

catalyst

ineffective.

manufacturer

in

Scientific
August

1999

confirmed that conclusion.
Octane

Enhancer

B

was

similarly

a

bust.

KataLeuna

prosecuted the patent application that had been transferred to
it

pursuant

to

the

TTA,

but

the

United

States

Patent

and

Trademark Office rejected it on the ground that the additive was
virtually

identical

to

a

pre-existing

South

African

patent.

Both compounds were based upon a blend of synthetic zeolites
with natural clinoptilolite, and each was designated for use in
a hydrocarbon cracking process.

6

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The parties’ business association thus turned out to be
short-lived.

KataLeuna opted to not renew the RDA, withholding

the final quarterly installment of $100,000.

KataLeuna also

notified CMP that the SAA would be terminated at the end of
November 1996.

The zeolites remained with CMP until late August

2005, when KataLeuna removed some and abandoned the rest.

CMP,

whose lease on the storage area was expiring, disposed of the
remaining materials.

No royalty payments, contemplated by the

TTA to begin on February 1, 1998, were ever made.
On January 15, 1998, prior to the date of performance with
respect to the royalty payments, CMP filed suit in the District
of Maryland against KataLeuna and TMG.
breaches

of

payments

due

under

the

The Complaint alleged
RDA

and

SAA,

and

it

anticipatorily sought a declaratory judgment as to the parties’
rights and responsibilities under the TTA.

Issues regarding

proper service resulted in the filing of the operative Amended
Complaint on December 9, 1998, which retained the RDA and SAA
breach claims (Counts I and II); substituted a claim (Count IV)
under the TTA for the former declaratory judgment count; amended
a

separate

compensation

SAA
for

claim

(Count

bailment

of

III)
the

to

assert

stored

entitlement

zeolites;

and

to

added

claims (Counts V and VI) for misappropriation and conversion,
respectively, of trade secrets relating to CMP’s FCC additives
technology.

The Amended Complaint named a third Defendant, TCP,
7

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which had been created in 1997 to establish KataLeuna’s former
research division, Triadd, as a formal business entity.

Counts

VII through X alleged that TMG was responsible for the acts of
KataLeuna outlined in Counts I-III, and independently liable for
conversion, misappropriation, and breach of the TTA.
three
Counts

allegations
XI

were

through

essentially

XIII.

CMP

repeated

demanded

a

The latter

against

jury

TCP

in

on

all

April

16,

trial

claims.
The
1999.

Defendants

answered

and

counterclaimed

on

By its operative Second Amended Counterclaim, KataLeuna

asserted breaches of the three agreements (Counts I-III) and
alleged in the alternative (Counts IV-VI) that CMP was unjustly
enriched.

According to KataLeuna, CMP did not live up to its

warranties in the TTA and ignored its obligations under the RDA
and SAA.

KataLeuna also maintained that CMP had converted the

consigned zeolites (Count VII), negligently exposed them to the
elements (Count VIII), and failed to remit sales proceeds as
agreed in the SAA (Count IX).

Finally, KataLeuna requested an

accounting as to chemicals it transferred to CMP, and as to FCC
additives that CMP sold to third parties (Count X).
The district court dismissed CMP’s conversion claims as to
the additives technology (Counts VI, IX, and XIII) on August 11,
1999.

Thereafter,

summary

judgment

to

on

September

TMG

and

TCP
8

18,
as

2001,
to

the

the

court

remaining

granted
claims

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against

them

Date Filed: 02/01/2012

(Counts

VII,

VIII,

Page: 9 of 39

X,

XI,

and

XII),

and

to

KataLeuna on the claims for breach of the TTA (Count IV) and for
misappropriation (Count V), leaving only CMP’s claims for breach
of the RDA and SAA (Counts I and II) and for bailment (Count
III).

On the counterclaim side of the ledger, the district

court awarded summary judgment to KataLeuna for $18,507.40, the
undisputed amount owed by CMP for the sale of zeolites (Count
IX).

In a proposed joint pretrial order submitted to the court

on August 28, 2002, KataLeuna abandoned its claims for unjust
enrichment (Counts IV-VI).
With

most

of

CMP’s

case

being

dismissed

or

summarily

adjudicated against it, the district court was of the opinion
that the portion of the counterclaim relating to the TTA (Count
I) dominated the remaining issues.

The court thus decided to

bifurcate that count for a bench trial on KataLeuna’s assertion
that it was entitled to equitable rescission, putting aside for
the time-being the parties’ competing legal claims under the RDA
and

SAA

(CMP’s

Counts

I-II,

and

KataLeuna’s

Counts

II-III),

along with those arising from the storage and safekeeping of the
consigned zeolites (CMP’s Count III and KataLeuna’s Counts VIIVIII).

As

the

result

of

that

twelve-day

bench

trial,

the

evidentiary portion of which was conducted over scattered dates
in

the

winter

and

spring

of

2003,

the

district

court,

on

September 28, 2003, entered a Rule 54(b) judgment rescinding the
9

Appeal: 10-1497

TTA,

Document: 69

awarding

“equitable

return,

restitution

damages

rescission,”

J.A.

.

for

.

of

Page: 10 of 39

$2,793,449.13

.

intertwined

and

2712,

respectively,

properties. 2
KataLeuna

Date Filed: 02/01/2012

ordering

the

TII

to

with
CMP

stock

KataLeuna
its

and

and

for

remedy

of

KataLeuna

to

the

technology

The judgment awarded an additional $134,945 to
attorney

misappropriation claims.

fees

incurred

in

defending

the

CMP proceeded to file an interlocutory

appeal, which we declined to certify and therefore dismissed.
See Order, Contract Materials Processing, Inc. v. Tricat Mgmt.
GmbH, No. 03-2253 (4th Cir. Mar. 10, 2005) (unpublished).
The

case

languished

on

remand

until

CMP

moved

for

the

district court’s recusal on September 28, 2006, citing in part
the litigation delay and other grounds, but based primarily on
the court’s service in 2003-05 as a member of the Board of
Directors of the Foundation for Research on Economics and the
Environment (“FREE”).

FREE’s activities as a nonprofit entity

are substantially underwritten by corporate subsidies, including
donations from Shell Oil Co., which, since 1998, has been an
indirect corporate parent of KataLeuna.

Following a hearing on

June 14, 2007, the court declined to recuse itself.

2

In the

Rule 54 permits a district court to “direct entry of a
final judgment as to one or more, but fewer than all, claims or
parties,” on condition that “the court expressly determines that
there is no just reason for delay.” Fed. R. Civ. P. 54(b).

10

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Date Filed: 02/01/2012

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interim, on January 24, 2007, CMP petitioned for mandamus relief
to compel recusal, which we summarily denied.

See Order, In re:

Contract Materials Processing, Inc., No. 07-1059 (4th Cir. Feb.
16, 2007) (unpublished).
At the June 14 hearing, the district judge revealed that he
had resigned from the Board of FREE following his receipt of an
undisclosed letter opinion on the matter from the Committee on
Codes of Conduct, an authorized body of the Judicial Conference
of the United States.

CMP again sought the court’s recusal

through a second petition for a writ of mandamus filed on July
13, 2007, requesting disclosure of the letter.
relief via a short-form order.

We again denied

See Order, In re:

Contract

Materials Processing, Inc., No. 07-1657 (4th Cir. Oct. 2, 2007)
(unpublished).
On April 28, 2008, KataLeuna tendered a Rule 68 offer of
judgment to CMP on the latter’s claims for breach of the RDA and
of

the

SAA

(Counts

I

and

II),

agreeing

to

pay

the

damages

demanded in the pleadings, plus interest and costs, to be offset
against any judgment in its favor on the counterclaim, Counts II
and III of which (pertaining to KataLeuna’s claims against CMP
under the RDA and SAA) would be dismissed with prejudice.

CMP

refused the offer, but, on October 30, 2008, the district court
nonetheless granted KataLeuna’s motion to dismiss Counts I and
II of the Amended Complaint for mootness.
11

The dismissal order

Appeal: 10-1497

also

Document: 69

encompassed

Counterclaim.

Date Filed: 02/01/2012

Counts

CMP

II

sought

and

Page: 12 of 39

III

immediate

of

the

review

Second
of

the

Amended
district

court’s order through a third mandamus petition and a separate
notice of appeal, neither of which were successful.
In re:

See Order,

Contract Materials Processing, Inc., No. 08-2246 (4th

Cir. Dec. 16, 2008) (unpublished) (denying petition for writ);
Order,

Contract

Materials

Processing,

Inc.

v.

KataLeuna

GmbH

Catalysts, No. 08-2311 (4th Cir. Feb. 9, 2009) (unpublished)
(dismissing appeal as interlocutory).
The parties submitted an amended proposed pretrial order on
November 19, 2009, in which KataLeuna abandoned its claim for an
accounting of proceeds from the sale by CMP of certain chemicals
and

additives

twelve

years

(Count
of

X).

That

litigation,

for

paved
a

the

jury

way,

trial

after
solely

almost
on

the

claims emanating from the consigned zeolites, relating to Count
III of the Amended Complaint and Counts VII and VIII of the
Second Amended Counterclaim.

The trial commenced on December 7,

2009, with the court granting judgment as a matter of law to
KataLeuna

on

CMP’s

claim

latter’s case-in-chief.

for

bailment

at

the

close

of

the

At the conclusion of trial, the jury

returned a verdict for KataLeuna on its claims for conversion
and negligence in the amount of $571,389.25, plus prejudgment
interest.

The district court entered its final judgment against

CMP on March 30, 2010, as follows:
12

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Date Filed: 02/01/2012

2,793,449.13
+ 1,732,091.53
4,525,540.66
571,389.25
+
8,452.51
5,105,382.42
+
18,507.40
5,123,889.82
(181,021.37)
+ (216,349.64)
$ 4,726,518.81
The

district

Page: 13 of 39

(TTA equitable damages)
(interest from 10/5/99)
(zeolites conversion/negligence)
(interest from 11/14/05)
(zeolites consignment sales)
(KataLeuna breach of RDA, plus interest)
(KataLeuna breach of SAA, plus interest)

court

entered

a

final

net

judgment

in

KataLeuna’s favor of $4,726,518.81, supplementing interlocutory
awards

to

KataLeuna

of

$202,469.26

in

attorney

fees

and

interest, together with discovery sanctions of $27,654.30.

On

appeal, CMP asserts that the proceedings below were infected
throughout

with

error.

For

clarity’s

sake,

we

address

in

chronological order the specific instances giving rise to these
assertions.

II.
A.
Shortly

after

the

filing

of

the

Amended

Complaint,

the

Defendants sought to dismiss CMP’s claims for misappropriation
and conversion.

The district court granted dismissal of the

conversion claims, concluding that CMP’s assignment through the
TTA

of

the

entirety

of

its

interest

in

the

FCC

additives

deprived it of any entitlement to possess them, an essential
element of the tort.

The court, however, “[i]n light of the
13

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Date Filed: 02/01/2012

Page: 14 of 39

liberal spirit pervading the pleading requirements,” declined to
dismiss the misappropriation claims.

J.A. 158.

In so ruling,

the court recognized that CMP had not alleged “that Kataleuna
initially obtained the technology improperly,” but had instead
maintained that, through subsequent transfers, one or more of
the other Defendants had “improperly procured [its] use . . . in
order

to

circumvent

royalty payments.”

Kataleuna’s

responsibility

to

pay

CMP

Id. at 159.

The misappropriation claims were thus among those permitted
to

proceed

to

discovery.

In

developing

the

discovery

plan,

counsel for CMP became informed that TII had hired John McCauley
in

April

1996

to

coordinate

with

McDaniel

in

specifying

and

controlling the research that CMP and Dr. Albers were to conduct
under the RDA.

McCauley’s assigned station was a lab in a

trailer

where

at

CMP,

he

worked

through

October

1996.

CMP

speculated that McCauley was a potential conduit for the flow of
proprietary information that enabled KataLeuna to further its
fledgling
advances

FCC

additives

from

discoveries.

the

TTA

business
technology

by
and,

developing
perhaps,

patentable
other

CMP

Proceeding on that theory, CMP requested at the

outset of the litigation “documents concerning . . . any FCC
additive,” J.A. 199, and “patent prosecution files . . . for all
patent applications related to [the TTA patents] or any related
non-U.S.

patent

applications.”

Id.
14

at

201.

The

defendants

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objected on trade secret and other grounds, in particular that
“documents concerning technology other than the [TTA technology]
are irrelevant.”

Id. at 213.

Some of the contested documents were accidentally produced,
relating

to

six

patent

applications

that

KataLeuna

was

then

pursuing, including one for SOx B, a magnesium oxide variation of
the

zinc

oxide-based

SOx

A

technology.

CMP

argued

for

the

production of additional materials based on its assertion that
the inadvertently disclosed documents revealed that some of the
new

applications

were

were

attributable

“continuation”

to

McCauley’s

applications,

efforts,

and

that
that

some
some

incorporated work product, such as testing results, produced by
CMP pursuant to the RDA.

Indeed, it seems that some of these

applications contained graphs with plot points derived from a
proprietary CMP procedure, which the company evidently perfected
while developing the additives that were the subject of the TTA.
Although the threshold for relevance is not a high one,
i.e., “information . . . reasonably calculated to lead to the
discovery of admissible evidence,” Fed. R. Civ. P. 26(b)(1), the
district court, at the December 16, 1999 hearing on CMP’s motion
to

compel,

called

the

company’s

attempts

at

discovery

“promiscuous,” J.A. 351, making it plain that the court was not
going

to

KataLeuna’s

convert

its

threshold

“extraordinarily
motion

to
15

dismiss

generous”
the

denial

of

misappropriation

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Date Filed: 02/01/2012

Page: 16 of 39

claims “into some dragon of a discovery machine and thereby open
up all kinds of lines of inquiry that simply are not likely to
lead anywhere fertile.”

Id. at 380.

After hearing from both

sides, the court declared that it was “not persuaded” by CMP’s
arguments that the requested materials were germane.

Id. at

401.
A district court’s discovery rulings are reviewed for abuse
of

discretion.

See

Carefirst

of

Md.,

Inc.

v.

Carefirst

Pregnancy Centers, Inc., 334 F.3d 390, 396 (4th Cir. 2003).

In

denying CMP’s motion to compel, some of the court’s remarks may
have

rankled

respect,

(“This

sir,

is

that

exactly

people

the

point

kind
to

of

when

thing,
they

with

talk

all

about

discovery abuse.”), J.A. 352, but the undercurrent motivating
them is readily understood:
survived

dismissal

had,

the relatively discrete claims that

with

discovery

scarcely

begun,

been

transformed into something much broader.
Worse,
under

the

Maryland

transformation
law

for

had

the

no

legal

basis.

misappropriation

of

A

claim

business

information is governed by the state’s adoption of the Uniform
Trade Secrets Act (“UTSA”), which requires, among other things,
that the information be “acquired by improper means.”
Ann. Com. Law § 11-1201(c)(1).
have

used

the

CMP

Md. Code.

To the extent that KataLeuna may

technology

to

facilitate

its

fledgling

catalyst business, it was not barred from doing so by the TTA,
16

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which merely required KataLeuna to pay royalties to CMP on sales
of

the

specific

additives

that

were

the

subject

of

that

agreement; consistently therewith, the RDA imposed an obligation
of confidentiality solely on CMP, with no similar restriction on
KataLeuna.

Consequently, the information that CMP sought was

not reasonably calculated to lead to the discovery of admissible
evidence, and the district court did not abuse its discretion by
declining to compel the Defendants to produce it.
Hewing

more

closely

to

the

misappropriation

claims

as

conceived in its pleadings, CMP pursued information concerning
the April 1997 decision to transfer TMG’s majority interest in
KataLeuna

to

proposed

would

additives

to

BvS,

the

have

TCP,

minority

assigned

contrary

in

the

The

KataLeuna’s

to

between Maher and Dr. Albers.
however.

owner.

an

arrangement

rights

alleged

oral

to

the

as
FCC

understanding

That deal never materialized,

Instead, by virtue of a series of agreements executed
summer

of

1998

among

multiple

parties,

TMG

indeed

divested its interest in KataLeuna, but the latter retained the
rights and obligations set forth in the TTA.
CMP sought to discover these “Summer 1998 Agreements,” but
not all of them were provided, and some that were provided were
heavily redacted.

With the assistance of the court, KataLeuna

agreed to produce less-redacted versions.

The matter appeared

to have been resolved, except for some complaints from CMP at a
17

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hearing to dismiss KataLeuna’s counterclaims, see J.A. 562-63,
and a couple of objections at the subsequent bench trial on
rescission, see id. at 1796-97, 1912-14, that the documentation
evidencing the transfer was unclear or incomplete.
proactive

efforts

from

CMP

to

bring

their

Absent more

complaints

to

the

attention of the court prior to the hearing or trial, however,
we are unable to ascertain any abuse of discretion.
B.
The
summary

misappropriation
judgment

stage,

claims

as

CMP

ultimately

could

show

failed

no

at

the

impropriety

or

misuse in that KataLeuna legitimately acquired all rights to the
FCC additives, and there was no evidence adduced of a subsequent
transfer

in

addition,

violation

the

of

district

the

supposed

court

noted

oral

a

agreement.

dearth

of

In

evidence

supporting the proposition that the technology had actually been
maintained

with

sufficient

secret” under the UTSA.

secrecy

to

qualify

as

a

“trade

See Md. Code. Ann. Com. Law § 11-

1201(e)(2) (defining term in part as information that “[i]s the
subject of efforts that are reasonable under the circumstances
to

maintain

its

secrecy”).

The

court

thereafter

granted

a

petition for attorney fees of $134,945 incurred in defending the
claims, finding that KataLeuna, TMG, and TCP had “carried the
burden imposed upon them by Maryland law, frankly by a very
large

margin,

to

show

clearly
18

and

convincingly

that

CMP

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initiated and maintained its trade secrets claims in bad faith.”
J.A. 1459.
A court may award attorney fees under the UTSA if a party
initiates or pursues in bad faith a claim for misappropriation
of trade secrets.

See Md. Code. Ann. Com. Law § 11-1204(1);

Optic Graphics, Inc. v. Agee, 591 A.2d 578, 588 (Md. Ct. Spec.
App. 1991).

Generally, an award of fees lies within the trial

court’s discretion.

See Deadwyler v. Volkswagen of Am., Inc.,

884 F.2d 779, 784 (4th Cir. 1989).
The district court here concluded that the misappropriation
claims were “alleged and maintained in objective speciousness,”
J.A. 1478 (footnote omitted), and it further referred to CMP’s
approach to discovery (multiple unsuccessful motions to compel,
coupled with deposition notices and a non-party subpoena being
quashed

for

subjective

“reckless

ill

will.

extravagance”)
Insofar

as

as
the

evidence
court’s

of

its

ruling

is

plausible in view of the facts and the law, it was not an abuse
of

discretion.

without

convening

CMP
an

complains

that

evidentiary

the

hearing,

court
but

awarded
our

fees

precedent

counsels that due process is satisfied so long as the court has
familiarized itself with the relevant facts by becoming immersed
in the underlying proceedings.
505, 521 (4th Cir. 1990).

See In re Kunstler, 914 F.2d

Such was undoubtedly the case here.

19

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The

district

Date Filed: 02/01/2012

court

also

Page: 20 of 39

granted

summary

KataLeuna on CMP’s claim for breach of the TTA.

judgment

to

CMP insists the

court’s ruling was in error, pointing to a single page from a
July 15, 1997 report by KataLeuna’s auditor, translated from the
German, stating that the TTA “was rescinded effective January 1,
1997.”
hearsay,

J.A. 1119.
but

CMP

The court excluded the report excerpt as
contends

that

the

statement

is

a

party

admission, see Fed. R. Evid. 801(d)(2), in that the auditor may
properly be considered an agent of KataLeuna.
Assuming, for the sake of argument, that the auditor was
KataLeuna’s agent and that the excerpt accurately reflected his
understanding

with

respect

to

the

TTA,

its

potential

admissibility under a hearsay exception is beside the point in
that the statement utterly lacks probative value.

To suggest

that KataLeuna attempted a unilateral rescission of the TTA is
contrary to any reasonable view of the case and its surrounding
context.

Following the initial exchange of rights for money,

KataLeuna’s only substantive obligation under the TTA was to pay
CMP if and when it sold the FCC additives.

Having not sold any

additives, KataLeuna paid no royalties to CMP; it did not have
to

“rescind”

anything.

KataLeuna

did

seek

rescission

as

a

remedy once it had been sued, but that particular action in no
way meets the legal definition of “breach.”

20

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Wrapped

up

Date Filed: 02/01/2012

in

this

issue,

Page: 21 of 39

as

with

the

misappropriation

claims, is CMP’s assertion that, prior to the execution of the
TTA,

Maher

and

Dr.

Albers

reached

an

oral

agreement

that

KataLeuna would not further transfer the FCC additive rights
until the royalty payments topped out at $7.6 million.

Maryland

law governs the contract, with the result that “[t]he parol[]
evidence

rule

only

applies

where

the

parties

to

a

written

contract agree or intend that the writing shall be their whole
agreement.”

State Dep’t of Gen. Servs. v. Cherry Hill Sand &

Gravel

443

Co.,

(citations

A.2d

628,

omitted).

631

Inasmuch

(Md.
as

Ct.

there

Spec.
is

App.

no

1982)

merger

or

integration clause in the TTA, it is at least arguable that
Maher’s alleged assurances to Dr. Albers could be part of the
parties’

agreement,

at

least

to

the

extent

that

non-

transferability is not flatly inconsistent with CMP’s written
assignment of its “entire right, title and interest.”
however,

there

is

no

evidence

that

transferred the rights to the additives.

KataLeuna

Again,
actually

The district court

therefore appropriately awarded summary judgment to KataLeuna on
CMP’s claim for breach.

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III.
A.
KataLeuna

countered

breach

elected

to

to

similar

In late 2002 or early 2003, as the parties were
KataLeuna

entitlement

with

remedies.

trial,

asserting

of

of

for

own,

claims

allegations

preparing

its

CMP’s

pursue

alternative

rescission,

forgoing its pursuit of legal damages and abandoning its claims
for unjust enrichment.

Rescission is an equitable proceeding,

see Griggs v. E.I. duPont de Nemours & Co., 385 F.3d 440, 447 &
n.4

(4th

Cir.

2004),

among

those

that

fall

outside

the

constitutional right to trial by jury of “suits at common law.”
U.S. Const. amend. VII; see Tull v. United States, 481 U.S. 412,
417 (1987) (citations omitted).
Nonetheless, the right to a jury trial for claims at law is
“preserved to the parties inviolate,” Fed. R. Civ. P. 38(a), and
“only in the most imperative circumstances . . . can the right
to

a

jury

trial

of

legal

issues

determination of equitable claims.”

be

lost

through

prior

Dairy Queen, Inc. v. Wood,

369 U.S. 469, 472-73 & n.7 (1962) (quoting Beacon Theatres, Inc.
v. Westover, 359 U.S. 500, 510-11 (1959)).

Thus, “where legal

and equitable claims are contained in the same set of facts, the
right to a jury trial, which the legal claims permit, should
predominate.”

Ritter v. Mount St. Mary’s College, 814 F.2d 986,

22

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990 (4th Cir. 1987); accord, Terry v. Chauffers, Teamsters and
Helpers Local 391, 863 F.2d 334, 336 (4th Cir. 1988).
Ritter, however, proved an exception to the rule.

In that

case, the district court erroneously dismissed the plaintiff’s
legal claims and conducted a bench trial on an equitable claim;
after the legal claims were reinstated on appeal, the question
arose as to whether the bench trial findings were precluded from
relitigation before the jury.
affirmative,

and

we

agreed,

The district court ruled in the
relying

on

the

Supreme

Court’s

decision in Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322
(1979), arising on similar facts, for the proposition that “the
harm

complained

of

is

insufficient

to

override

interest in the speedy resolution of disputes.”

the

judicial

Ritter, 814

F.2d at 991.
Plainly, “mixed” cases in which rescission is invoked as a
potential remedy pose a problem for the district courts in case
administration.

One approach to the problem is to employ a

method whereby “the jury first decides the questions of fact and
then

the

remedy.”

judge

decides

whether

rescission

is

an

appropriate

Falco v. Alpha Affiliates, Inc., No. 97-494, 2000 WL

727116 (D. Del. Feb. 9, 2000) (unpublished) (citing precedent
that

substantial

non-performance

justifying

rescission

is

a

question for the trier of fact, and noting that “many, but not
all, of the alleged facts underlying the equitable counterclaim
23

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are the same as that underlying the counterclaims triable to the
jury”);

cf.

Terry,

863

F.2d

at

339

(“Resolution

of

the

declaratory relief demand, however, raises legal issues that may
well require both a determination by the court of the meaning of
the collective bargaining agreement and a resolution by the jury
of

disputed

facts

concerning

whether

that

agreement

was

breached.”).
It is arguably a different situation where the legal and
equitable

claims

arise

on

separate

facts,

such

as

in

Dollar

Sys., Inc. v. Avcar Leasing Sys., Inc., 890 F.2d 165 (9th Cir.
1989), in which the court of appeals upheld the district court’s
decision

to

conduct

counterclaim

for

decide

remaining

the

a

bench

rescission,
legal

trial

prior

to

claims.

on

the

impaneling
The

defendants’
a

Ninth

jury

to

Circuit

acknowledged the rule of Dairy Queen, but observed that “[t]he
legal and equitable claims asserted in this action . . . do not
involve any common questions of law or fact.”

Id. at 170.

In

such a situation, “the order of trial is immaterial, and may be
left in the discretion of the court.”

Id. at 171 (quoting 9 C.

Wright & A. Miller, Federal Practice and Procedure § 2305, at 35
(1971)); accord, Arber v. Essex Wire Corp., 490 F.2d 414, 421-24
(6th Cir. 1974) (finding no violation of Seventh Amendment where
federal claim potentially implicating right to jury trial was

24

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dismissed and rescission subsequently elected as to remaining
state law claim).
The

parties

dispute

whether

KataLeuna’s

equitable

counterclaim seeking rescission of the TTA is truly independent
of CMP’s indisputably legal claims for damages under the RDA and
SAA.

It is certainly the case that the RDA is one of several

documents referred to in the TTA whose execution and delivery
was a condition of closing.

It is also true that one purpose of

the RDA was “to further develop [the TTA] technology,” J.A. 106,
together

with

additives

were

new

additives

apparently

technologies.

subject

to

That

additional

the

FCC

testing

and

refinement, however, has scant bearing on whether CMP lived up
to

its

representations

in

the

TTA

that

the

technology

was

useful, reliable, and patentable, and very little to do with
CMP’s specific claim of non-payment under the RDA.

Thus, the

facts underlying this appeal are analogous to those described by
the Ninth Circuit in Avcar, and a similar result should arguably
obtain.

More to the point, however, any error occasioned by the

bifurcation

in

this

matter

was

harmless,

inasmuch

as

CMP

recovered fully on its claims under the RDA and SAA.
B.
KataLeuna’s claim under the TTA thus proceeded to trial
before the district court, sitting without a jury.
witnesses

were

Christopher

Rosenthal
25

and

Arthur

Among the
Steiner.

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Rosenthal was KataLeuna’s damages expert.

Following Rosenthal’s

brief testimony, CMP declined the court’s invitation to crossexamine, explaining that “[w]e’re going to call him during our
defense case.”

J.A. 1756.

KataLeuna objected, and the court

reserved ruling, although it opined “That’s not the way it’s
done.”
who

Id. at 1759.

had

testified

CMP employed the same tactic with Steiner,
on

behalf

of

KataLeuna

as

an

expert

on

patents, and also as a fact witness on KataLeuna’s attempt to
obtain certain patents.

KataLeuna again objected, and the court

again deferred its ruling:

“You know my feelings about the

whole question of CMP’s recalling certain witnesses . . . .
[Counsel] will have to make a very detailed proffer . . . before
I permit him to recall any witness.”

Id. at 1811-12.

When the time came for the proffer, counsel explained that
CMP

wanted

being

to

question

premised

equitable

on

a

rescission

Rosenthal
legal

on

breach

theory,

to

his

damages

theory,

inquire

as

calculation

rather
to

than

some

an
late

revisions to his report, and “to ask him about some defects that
are in his methodology and in his analyses.”

J.A. 1817.

With

respect to Steiner, CMP proposed to examine him regarding patent
applications

for

SOx B

and

combustion

promoters

submitted

by

KataLeuna that, according to CMP, had been based upon the FCC
additives technology.

The district court denied recall of both

witnesses, ruling that the proffer as to Rosenthal would have
26

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Page: 27 of 39

been the proper subject of cross-examination, and the proffer as
to Steiner was foreclosed in reaffirmation of the court’s prior
rulings

on

the

misappropriation

claims.

Proffered

testimony

from Dr. Albers as to the patent sources was also excluded.
We review evidentiary rulings to ensure that the district
court did not abuse its discretion.

See United States v. Blake,

571 F.3d 331, 350 (4th Cir. 2009) (citation omitted).

The trial

court is afforded wide latitude in the conduct of proceedings
and presentation of evidence, and, in this instance, it gave
counsel ample and timely warning that CMP might be precluded
from eliciting evidence from hostile witnesses in the manner it
apparently
appears

to

preferred.
have

Under

acted

well

the

circumstances,

within

its

sound

the

court

discretion

in

conforming its rulings to its warnings.
Apart from the foregoing procedural dispute, CMP maintains
that

the

district

court

substantively

KataLeuna entitled to rescission.

erred

in

adjudging

CMP contends that the court’s

conclusion flouts a number of legal prerequisites to equitable
relief,

specifically

that:

(1)

the

parties

could

not

be

restored to their respective positions prior to the TTA, because
KataLeuna sold the additives technology to TCP; (2) KataLeuna
failed to tender all the benefits it received under the TTA; (3)
KataLeuna had an adequate remedy at law for damages; (4) the

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election of remedy came too late and was thus barred by laches;
and (5) CMP’s breach of the TTA, if any, was not material.
These contentions merit little discussion.

The record is

clear that although KataLeuna contemplated a transfer of the
additives

technology,

throughout.

it

actually

retained

those

rights

Moreover, the supposed benefits KataLeuna failed to

tender (the profits purportedly realized from the transfer that
did not happen, together with allegedly derivative SOx B and
copper palladium combustion promoter patents) likewise find no
record

support

testified

at

for

their

deposition,

without

learned nothing from CMP.”
Although

a

minority

Indeed,

existence.

McCauley

contradiction,

“that

he

to

the

J.A. 392.
of

jurisdictions

adhere

traditional rule that rescission is contingent upon damages at
law proving inadequate, Maryland affords the innocent party the
right to rescission whenever “there has been a material breach
of a contract.”
Co.,

382

A.2d

Washington Homes, Inc. v. Interstate Land Dev.
555,

563

(Md.

1978).

The

right

to

elect

rescission can be waived if not elected within a reasonable time
following

discovery

of

the

breach

and

the

breaching

party

suffers prejudice from the delay, see Benjamin v. Erk, 771 A.2d
1106, 1120 (Md. Ct. Spec. App. 2001), but the district court
specifically found that KataLeuna did not reasonably discover
that

all

the

TTA

technologies

were

28

without

value

until

well

Appeal: 10-1497

Document: 69

after

litigation

Date Filed: 02/01/2012

had

commenced.

Page: 29 of 39

See

J.A.

2704.

And,

notwithstanding CMP’s insistence that the TTA cannot be properly
understood

independently

of

the

RDA’s

contemplation

that

the

additive technologies were subject to further development, it
seems plain that the essence of CMP’s obligations under the TTA
was that something worth developing was being transferred.

The

district court’s judgment of rescission, being supported by the
facts and governing law, was therefore proper.

IV.
As previously noted, we dismissed as premature CMP’s appeal
of the Rule 54(b) order entering judgment for KataLeuna on its
counterclaim for rescission.
Dr.

Albers

filed

a

sworn

About eighteen months afterward,
declaration

pursuant

§ 144, seeking the district court’s recusal. 3

to

28

U.S.C.

The declaration

accused the court of intentionally delaying the proceedings on
remand, and it set forth Dr. Albers’s belief that the court had
“not

been

association

impartial
with

in

FREE

this
or

case

[its]

3

as

a

result

identification

of
with

[its]
the

The statute provides, in pertinent part, that if a party
to any proceeding before the district court devises and submits
“a timely and sufficient affidavit that the judge before whom
the matter is pending has a personal bias or prejudice either
against him or in favor of any adverse party, such judge shall
proceed no further therein, but another judge shall be assigned
to hear such proceedings.” 28 U.S.C. § 144.

29

Appeal: 10-1497

Document: 69

substantial
4083.

Date Filed: 02/01/2012

contributors

to

that

Page: 30 of 39

private

foundation.”

J.A.

According to Dr. Albers, partiality was manifest in the

court’s rulings against CMP and in its statement on remand that
it would not reconsider any matter previously decided.
A

district

court

has

the

discretion

to

entertain

the

possibility of recusal, and its exercise of discretion in favor
of remaining on the matter is reviewed for abuse.

See Newport

News Holdings Corp. v. Virtual City Vision, Inc., 650 F.3d 423,
432 (4th Cir. 2011).

At the outset, we may decline KataLeuna’s

invitation

res

to

invoke

judicata

on

its

assertion

denial of mandamus relief decided the issue.

that

our

Mandamus is, of

course, an extraordinary remedy to which the petitioner need
show a clear entitlement.

See In re Beard, 811 F.2d 818, 826

(4th Cir. 1987) (noting that “mandamus will not issue when all
that is shown is that the district court abused its discretion
in making the challenged ruling”).

Our review would therefore

have been more deferential than it is now, on appeal of the
final order.
Under any standard, however, it was hardly incumbent upon
the district court to disqualify itself.

To begin with, “the

bias or prejudice which can be urged against a judge must be
based upon something other than rulings in the case.”
United States, 255 U.S. 22, 31 (1921).

Berger v.

A properly sworn § 144

affidavit accompanied by the certificate of counsel that it is
30

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Page: 31 of 39

being filed in good faith, upon being acknowledged by the court
as

legally

presiding

sufficient,
judge.

is

The

enough

to

affidavit,

require

however,

recusal

the

“show

must

of

the

objectionable inclination or disposition of the judge, which we
have

said

is

an

intimations

of

association

with

essential

prejudice
a

condition.”
or

bias

nonprofit

Id.

founded

entity

at
on

receiving

35.
the

Mere
court’s

indeterminate

funding by a remote parent of a corporate litigant fall short of
the required showing.
In

Berger,

the

affidavit

was

filed

on

information

and

belief by defendants in a 1918 espionage prosecution, three of
whom

were

of

German

or

Austrian

descent.

The

defendants’

averments related certain remarks attributed to the trial judge,
Kenesaw Mountain Landis, in a different proceeding.
to

the

defendants,

Judge

Landis

premised

his

According
remarks

by

boasting, “If anybody has said anything worse about the Germans
than I have I would like to know it so I can us[e] it.”
U.S. at 28.
a

very

255

Judge Landis went on to opine that “[o]ne must have

judicial

mind,

indeed,

not

German-Americans in this country.”

to

Id.

be

prejudiced

against

He continued:

Their hearts are reeking with disloyalty . . . . This
same kind of excuse of the defendant offering to
protect the German people is the same kind of excuse
offered by the pacifists in this country, who are
against the United States and have the interests of
the enemy at heart by defending that thing they call
the Kaiser and his darling people . . . .
I know a
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safe-blower . . . who is making a good soldier in
France. He was a bank robber for nine years, that was
his business in peace time, and now he is a good
soldier, and as between him and this defendant, I
prefer the safeblower.
Id.

at

28-29.

Needless

to

say,

Judge

Landis’s

purported

statements were far more illuminative of his state of mind in
that

case

than

the

circumstances

alleged

here

to

reveal

district court’s supposed bias in favor of KataLeuna.

the

Cf. Davis

v. Bd. of Sch. Comm’rs of Mobile Cnty., 517 F.2d 1044, 1050 (5th
Cir.

1975)

discretion

(concluding
by

that

refusing

to

trial

judge

disqualify

did

himself

not
in

abuse

his

response

to

“peremptory challenge type approach [that] would bid fair to
decimate the bench.

Lawyers, once in controversy with a judge,

would have a license under which the judge would serve at their
will.”).
Though we by no means insinuate that a section 144 affiant
need produce evidence of a trial judge’s bias or prejudice to
the degree attributed to Judge Landis in Berger, Dr. Albers’s
declarations in this matter fall far short of the evidentiary
critical

mass

necessary

district

court

should

to

have

compel
recused

the

conclusion

itself.

That

that

the

being

the

situation, we can discern no abuse of discretion in the court’s
decision to remain on the case.

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Page: 33 of 39

V.
A.
The matter of the court’s recusal having been resolved for
the

time-being

by

our

denial

of

extraordinary

relief,

parties moved inexorably toward their final trial.
to

be

tried

approval

narrowed

of

considerably

KataLeuna’s

offer

of

upon

the

judgment

former’s breach of the RDA and SAA.

The issues

district
to

the

CMP

court’s
for

the

Federal Rule of Civil

Procedure 68 provides that “a party defending against a claim
may serve on an opposing party an offer to allow judgment on
specified terms, with the costs then accrued.”
68(a).

Fed. R. Civ. P.

If the offer is accepted, then the clerk must enter

judgment consistent with the agreed terms, but “[a]n unaccepted
offer is considered withdrawn,” and the defendant’s subsequent
costs are subject to being paid by the plaintiff in the event
that the eventual judgment obtained is less favorable than the
defendant’s offer.

Fed. R. Civ. P. 68(b), (d).

The rule undoubtedly contemplates an offer in the nature of
a compromise, but in this case KataLeuna tendered full judgment
in

offset,

Counts

I

including

and

II

of

prejudgment
CMP’s

Amended

interest

and

Complaint.

costs,
Despite

as

to

CMP’s

purported rejection of the offer, the district court essentially
forced its acceptance by ruling that it no longer had subject

33

Appeal: 10-1497

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Page: 34 of 39

matter jurisdiction over the claims because their satisfaction
had mooted the underlying case or controversy.
Our precedent supports the court’s ruling.
Bell,

800

action,

F.2d

390

(4th

affirmed

we

386,

Cir.

the

district

1986),
court’s

In Zimmerman v.

a

putative

dismissal

class

of

the

plaintiff’s individual claims following the defendants’ offer of
judgment in full.
“there

was

no

We observed that in light of the offer,

longer

any

case

or

controversy.

.

.

.

[The

plaintiff’s] personal stake in the outcome had disappeared, and
federal courts do not sit simply to bestow vindication in a
vacuum.”

Id.

CMP counters, citing Bevier v. Blue Cross & Blue Shield of
S.C.,

337

Fed.

App’x

357

(4th

Cir.

2009)

(per

curiam)

(unpublished), in which we rejected the plaintiff’s contention
on appeal that his acceptance of the defendant’s Rule 68 offer
of a money judgment failed to extinguish his right to pursue
permanent injunctive relief on the same claim.
CMP,

the

circumscribed

consideration

of

a

context

broader

evident

proposition

in

that

According to
Bevier

a

court

permits
may

not

invoke an offer of judgment to dismiss particular claims in a
multiple-claim proceeding.
In so arguing, CMP conflates the dismissal of individual
“claims” in a lawsuit (which is clearly permitted by the text of
the

rule),

with

the

dismissal
34

of

the

gamut

of

potential

Appeal: 10-1497

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Page: 35 of 39

“remedies” associated with a claim (which is all that Bevier had
occasion to address).

CMP insists that the RDA and SAA issues

overlap the rest of the case, and it was therefore error to
remove the consideration of those claims from the jury, but for
the reasons previously discussed with respect to the bifurcation
of KataLeuna’s claim for rescission of the TTA, the court did
not abuse its discretion in the conduct of the proceedings.
B.
In preparing for the jury trial on the claims involving the
consigned zeolites, KataLeuna noticed depositions of Dr. Albers
and his son-in-law, Kurt Kroger, the latter being a lawyer who
had

assumed

affairs.
and

responsibility

for

winding

up

CMP’s

business

Although CMP had, throughout the litigation, accepted

produced

witnesses

pursuant

to

the

identical

notice

templates, counsel in these instances (in conjunction with local
counsel for Dr. Albers in Florida, and with counsel for Kroger
in California) advised their clients not to attend the scheduled
depositions because, in counsel’s estimation, the notices were
technically
addresses.

defective

for

Thereafter,

not

including

CMP’s

counsel

the

witnesses’

refused

all

local

proffered

dates to reschedule the deposition of Kroger (whom his firm did
not

represent),

and

motion to compel.

did

not

relent

until

KataLeuna

filed

a

After the depositions were conducted, the

district court denied KataLeuna’s motion as moot.
35

Appeal: 10-1497

Document: 69

Date Filed: 02/01/2012

Page: 36 of 39

In addition to the deposition shenanigans, CMP failed to
produce a videotape that KataLeuna specifically requested, one
in which Kroger detailed KataLeuna’s cleanup and removal of the
zeolites.

At first, CMP disavowed the video’s existence and

denied that such a thing had ever been commissioned; six months
later, CMP acknowledged possession of the tape but produced only
a redacted copy, asserting the attorney-client and work-product
privileges in its formation.
Upon finding all the foregoing, the district court awarded
KataLeuna $27,654.30 in attorney fees.

Where a party “fails to

obey an order to provide or permit discovery,” sanctions may
include

paying

“the

reasonable

expenses,

fees” attributable to the failure.
-(C).

CMP

points

out

that

it

including

attorney’s

Fed. R. Civ. P. 37(b)(2)(A),
disobeyed

no

specific

order

pursuant to a motion to compel, but that position misapprehends
the proper meaning of the word “order” in the rule.

CMP’s

actions

court

contravened

authorizing

the

discovery,

general
see

order

J.A.

3211,

of
and

the

district

it

was

within the court’s discretion to award sanctions.

therefore

See Deadwyler

v. Volkswagen of Am., Inc., 884 F.2d 779, 784 (4th Cir. 1989)
(reciting abuse-of-discretion standard).
C.
A jury was impaneled to decide whether KataLeuna was liable
in

bailment

to

reimburse

CMP

for

36

the

cost

of

keeping

the

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Page: 37 of 39

consigned zeolites on the latter’s property for nearly ten years
prior to their removal, and whether CMP was liable in conversion
or negligence for permitting the exposed materials to degrade by
moving

them

outside

its

warehouse.

Under

the

SAA,

CMP

was

entitled to a percentage of net sales of the zeolites, plus
$20,000 per month “[i]n support of [its] sales and Marketing
expenses.”

J.A. 89.

CMP took the position that $6,000 of the monthly charge for
expenses

was

allocated

for

storage,

based

on

an

alleged

conversation among McDaniel (on behalf of KataLeuna) and Dr.
Albers and his son (on behalf of CMP), following termination of
the

SAA,

during

which

CMP

zeolites for that price.

offered

to

continue

to

house

the

Prior to trial, the district court

excluded

evidence

of

that

generally

(based

on

the

particular
parol

conversation

evidence

rule

and,

and

more

the

SAA

integration clause), evidence of any negotiations concerning the
execution of the SAA or attempted oral modification afterward.
The
respond

court
to

(including

explained

specific
the

that,

in

discovery

non-disclosure

light

of

inquiries
prior

to

CMP’s

failure

regarding

the

hearing

to

damages
of

any

conversation involving McDaniel and the Alberses), it was stuck
with Dr. Albers’s 1999 deposition testimony that the standard
annual storage fee in the area was “probably around $6 a square

37

Appeal: 10-1497

Document: 69

J.A. 3639-40, 3810. 4

foot.”
that

Date Filed: 02/01/2012

KataLeuna

should

Page: 38 of 39

The court rejected CMP’s arguments

have

phrased

its

discovery

requests

differently or moved to compel more specific answers.

See id.

at 3866.
During the trial, the district court sustained objections
to

questions

conversations
regarding

concerning
between

similar

the

Dr.

substance

Albers

conversations

and

of

post-termination

McDaniel,

between

Dr.

to

questions

Albers’s

son

and

other KataLeuna representatives, and to CMP reading into the
record

a

letter

whereby

zeolites as “consigned.”

KataLeuna’s

counsel

referred

to

See J.A. 3871-74, 3901-06, 4010.

the
All

that was presented to the jury with respect to CMP’s claim for
bailment was KataLeuna’s recitation, for impeachment purposes,
of Dr. Albers’s conclusory testimony at deposition that CMP was
seeking $6,000 per month as storage compensation.

There was no

evidence

the

of

any

written

agreement

between

parties

establishing a bailment at a particular rate, nor of any written
demand or invoice supporting an inference that KataLeuna had
acquiesced to CMP’s terms.

Dr. Albers was not even asked to

4

Based on the uncontested representations of KataLeuna’s
counsel that the zeolites had been stored in approximately 1,600
square feet of space, CMP’s claim would have been for only about
$800 per month.

38

Appeal: 10-1497

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Page: 39 of 39

repeat his deposition testimony that the fair market value for
storage was $6 per square foot.
At
granted

the

end

of

KataLeuna’s

CMP’s

case-in-chief,

judgment

as

a

the

matter

district

of

law

court

on

CMP’s

bailment claim, ruling that no reasonable jury could conclude
that KataLeuna was legally obligated to CMP.

Moreover, the lack

of

court,

evidence

on

damages,

according

to

the

would

have

required the jury to engage in impermissible speculation as to
their proper measure.
The

rules

See J.A. 3937-39.

plainly

specify

that

“[i]f

a

party

fails

to

provide information or identify a witness . . . , the party is
not

allowed

to

use

that

information

or

witness

to

supply

evidence . . . at a trial, unless the failure was substantially
justified or is harmless.”

Fed. R. Civ. P. 37(c)(1).

It is

therefore difficult to see how the district court abused its
discretion in excluding CMP’s late proffer.
correct,

in

light

of

the

resultant

lack

The court was also
of

proof,

to

enter

judgment as a matter of law for KataLeuna on CMP’s bailment
claim.

VI.
Pursuant to the foregoing, the judgment of the district
court is affirmed.
AFFIRMED
39