Gardensensor, Inc v. Stanley Black & Decker, Inc

Filing 239

Order by Magistrate Judge Nathanael M. Cousins denying 230 Motion for New Trial. (nclc2S, COURT STAFF) (Filed on 3/20/2015)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 GARDENSENSOR, INC., a Delaware 11 Corporation, formerly known as PLANTSENSE, INC., a Delaware 12 Corporation, 13 14 Case No. 12-cv-03922 NC ORDER DENYING PLANTSENSE’S MOTION FOR A NEW TRIAL Plaintiff, Re: Dkt. No. 230 v. 15 BLACK & DECKER (U.S.), INC., a Maryland Corporation, 16 17 18 Defendant. Plaintiff PlantSense moves for a new trial in this breach of contract action. 19 PlantSense contends that the jury’s verdict in Black & Decker’s favor is contrary to the 20 clear weight of the evidence and is an improper “compromise verdict.” Having considered 21 the evidence and weighed the credibility of the witnesses, the Court does not have a firm 22 conviction that the jury has made a mistake or reached a “compromise verdict.” 23 Accordingly, the motion for a new trial is DENIED. 24 25 I. BACKGROUND This action arises out of a contract (the “EasyBloom Agreement”) entered into 26 between PlantSense (also known as “Gardensensor”) and Black & Decker. See Dkt. No. 27 220 at 2. The EasyBloom Agreement concerned the PlantSmart product, which is a 28 gardening tool that takes soil, water and light readings and provides users with information Case No. 12-cv-03922 NC ORDER DENYING MOTION FOR A NEW TRIAL 1 about their home plants and garden plants through the Internet. Id. Pursuant to the 2 EasyBloom Agreement, the PlantSmart product was sold by Black & Decker under the 3 Black & Decker brand name. Id. PlantSense brought this lawsuit, claiming that Black & 4 Decker breached the EasyBloom Agreement causing monetary damages to PlantSense. Id. 5 The case was tried to a jury over the course of seven days. Dkt. No. 223. The Court 6 instructed the jury that, to recover damages for breach of contract, PlantSense had to prove 7 by a preponderance of the evidence, among other things, that Black & Decker failed to 8 perform “one or more terms of the contract” and that PlantSense was harmed by that failure. 9 Dkt. No. 220 at 7. 10 The jury instructions explained that PlantSense claimed Black & Decker failed to do 11 the following in breach of the contract between PlantSense and Black & Decker: 12 13 14 15 16 17 18 19 20 (a) Provide PlantSense every month during the term of the agreement with an updated 12-month delivery and forecast schedule for the PlantSmart product; (b) Make reasonable commercial efforts to obtain orders for the PlantSmart product with sales efforts normal for Black & Decker’s business; (c) Commit marketing funds that Black & Decker reasonably determined were necessary to support the launch and sale of the PlantSmart product; (d) Meet the $350,000 minimum marketing placement spend by December 4, 2010; [] (e) Make reasonable efforts to support the PlantSmart product with marketing spends normal for Black & Decker’s business; (f) Provide reasonable evidence to PlantSense that shows that the marketing activity described in subsections (c), (d), and (e) above has taken place. 21 Dkt. No. 220 at 8. 22 With respect to damages, the Court instructed the jury in pertinent part as follows: 23 If you find that Black & Decker committed a breach of contract, PlantSense is entitled to compensation in an amount that will place it in the same position it would have been in if the contract had been properly performed. In assessing damages, you must consider how PlantSense’s position would have been different “but-for” Black & Decker’s breach of the contract. The measure of damages is the loss actually sustained as a result of the breach of the contract. PlantSense has the burden of proving damages by a preponderance of the evidence. 24 25 26 27 28 Id. at 11. Case No. 12-cv-03922 NC ORDER DENYING MOTION FOR A NEW TRIAL 2 1 The Court further instructed the jury that: 2 PlantSense bears the burden of showing that its lost profit damages were the immediate, direct, and proximate result of the alleged breach of contract by Black & Decker. PlantSense’s lost profit damages would be considered the direct result of the breach if they are precisely what PlantSense bargained for, and only an award of damages equal to lost profits will put PlantSense in the same position it would have occupied had the contract been performed. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 To recover the damages it seeks, PlantSense bears the burden of proving with reasonable certainty that a breach of the contract by Black & Decker caused PlantSense an injury. Reasonable certainty is not the same as absolute certainty. Rather, reasonable certainty merely means that the fact of damages must not be speculative. Once the fact of damage is established, PlantSense does not need to prove the amount of damages with mathematical accuracy. However, PlantSense must provide evidence offering some reasonable basis upon which you may estimate with a fair degree of certainty the probable loss which PlantSense will sustain in order to enable you to make an intelligent determination of the extent of the loss. The fact that there might be some uncertainty as to PlantSense’s damage or the fact that the damage might be very difficult to measure will not preclude you from determining its value. If you find that Black & Decker’s conduct created any of the uncertainties that may make estimating PlantSense’s damages less than a mathematically precise exercise, it will be enough if the evidence show the extent of the damages as a matter of just and reasonable inference, although the result be only approximate. However, the damages may not be determined by mere speculation or guess. If you find that the fact of such lost profits is speculative or that the amount of any lost profits is unproven, then you may not award damages for lost profits. Also, in calculating such damages, you must calculate net profit: the amount by which PlantSense’s gross revenue would have exceeded all of the costs and expenses that would have been necessary to produce those revenues. Lost profits on a new business may be too speculative to allow recovery if there is no evidence that the business would be profitable, but recovery for lost profits is not denied merely because a business is newly established. A new business, like an existing business, must prove lost profits with reasonable certainty. 22 Id. at 12-13. 23 The jury returned a unanimous verdict, finding that (1) PlantSense proved by a 24 preponderance of the evidence that PlantSense substantially complied with the terms of its 25 contract with Black & Decker; (2) PlantSense proved by a preponderance of the evidence 26 that Black &Decker failed to perform one or more terms of its contract with PlantSense; and 27 (3) PlantSense did not prove by a preponderance of the evidence that Black & Decker’s 28 failure to perform one or more terms of its contract with PlantSense was a direct and Case No. 12-cv-03922 NC ORDER DENYING MOTION FOR A NEW TRIAL 3 1 proximate cause of harm to PlantSense. Dkt. No. 224. PlantSense then filed this motion for a new trial, contending that the jury’s finding 2 3 that Black & Decker’s breach of the EasyBloom Agreement did not harm PlantSense is 4 “contrary to the clear weight of the evidence” and is an improper “compromise verdict.” 5 Dkt. No. 230-1. II. LEGAL STANDARD 6 Rule 59 of the Federal Rules of Civil Procedure provides that the court may grant a 7 8 motion for a new trial “on all or some of the issues . . . for any reason for which a new trial 9 has heretofore been granted in an action at law in federal court.” Fed. R. Civ. P. 10 59(a)(1)(A). The Ninth Circuit has held that “[t]he trial court may grant a new trial only if 11 the verdict is contrary to the clear weight of the evidence, is based upon false or perjurious 12 evidence, or to prevent a miscarriage of justice.” Molski v. M.J. Cable, Inc., 481 F.3d 724, 13 729 (9th Cir. 2007) (quoting Passantino v. Johnson & Johnson Consumer Prods., 212 F.3d 14 493, 510 n.15 (9th Cir. 2000)). Where a movant claims that a verdict is against the clear weight of the evidence, a 15 16 new trial should be granted where, after giving full respect to the jury’s findings, “the judge 17 on the entire evidence is left with the definite and firm conviction that a mistake has been 18 committed.” Landes Const. Co. v. Royal Bank of Canada, 833 F.2d 1365, 1371-72 (9th Cir. 19 1987) (quoting 11 C. Wright & A. Miller, Federal Practice and Procedure § 2806, at 48-49 20 (1973)). In ruling on a motion for a new trial, “[t]he judge can weigh the evidence and 21 assess the credibility of witnesses, and need not view the evidence from the perspective 22 most favorable to the prevailing party.” Id. at 1371. The authority to grant a new trial “is 23 confided almost entirely to the exercise of discretion on the part of the trial court.” Allied 24 Chem. Corp. v. Daiflon, Inc., 449 U.S. 33, 36 (1980). 25 // 26 27 28 Case No. 12-cv-03922 NC ORDER DENYING MOTION FOR A NEW TRIAL 4 III. DISCUSSION 1 2 A. 3 4 The Clear Weight Of The Evidence Does Not Compel the Conclusion That Black & Decker Breached Its “Substantive” Marketing Duties. PlantSense argues that the jury’s finding that Black & Decker’s breach of the 5 EasyBloom Agreement did not harm PlantSense is “contrary to the clear weight of the 6 evidence.” Dkt. No. 230-1. The Court instructed the jury that PlantSense claimed a number 7 of different breaches by Black & Decker. See Dkt. No. 220 at 8. Black & Decker correctly 8 points out that the verdict form, which asked the jury to find if Black & Decker failed to 9 perform “one or more terms of its contract” with PlantSense, allowed the jury to find 10 technical reporting breaches of the EasyBloom Agreement, but no harm caused thereby. 11 Dkt. Nos. 224, 231. PlantSense did not ask for a verdict form that would require the jury to 12 identify the specific breach they found. Nevertheless, PlantSense’s motion for new trial is 13 based on the premise that the jury found that Black & Decker did not fulfill its contractual 14 marketing obligations, as opposed to a reporting requirement about marketing. This is 15 justified, according to PlantSense, because “[a]ny finding that Black & Decker did not 16 breach at least one substantive duty to market and sell PlantSmart would be contrary to the 17 clear weight of the evidence and, therefore, warrant a new trial in and of itself.” Dkt. No. 18 232. The Court disagrees. 19 PlantSense asserts that the evidence at trial showed that, during the eight months that 20 Black & Decker marketed PlantSmart, Black & Decker spent far less than what it normally 21 spent to market comparable “drive” items or what Black & Decker had originally planned 22 to spend to market PlantSmart. Dkt. No. 230-1. PlantSense points to evidence that Black & 23 Decker classified PlantSmart as a “Tier A” product, or “drive item,” meaning that 24 PlantSmart was supposed to get the “most amount of focus and effort and investment” from 25 Black & Decker. Dkt. No. 230-7 (Weetenkamp Tr. at 88-89). Evidence was also presented 26 that the money spent on the PlantSmart DRTV commercial was very different from the 27 DRTV money that had been spent on some other Black & Decker products. Dkt. No. 230-3 28 (Cunningham Tr. at 902-905). Black & Decker historically spent $500,000 on the Case No. 12-cv-03922 NC ORDER DENYING MOTION FOR A NEW TRIAL 5 1 production of a DRTV commercial, Dkt. No. 230-6 (Pfister Tr. at 357), and spent upwards 2 of $1 million to air DRTV commercials for some other products. Dkt. No. 230-5 (McHugh 3 Tr. at 69-77); Dkt. No. 230-3 (McHugh Tr. at 1020-21; Cunningham Tr. at 928-32); Dkt. 4 No. 230-23 (PX29). While Black & Decker had originally planned to spend in excess of $1 5 million on a DRTV campaign for PlantSmart, it actually spent $60,000 to produce and 6 $100,000 to air the PlantSmart DRTV commercial. Dkt. No. 230-19 (PX23); Dkt. No. 2307 3 (Cunningham Tr. at 902, 905; McHugh Tr. at 1021). Unlike other Black & Decker 8 DRTV campaigns that were national, Dkt. No. 230-5 (McHugh Tr. at 24), Black & Decker 9 ran the PlantSmart DRTV campaign in three markets, for three weeks. Dkt. No. 230-3 10 (Cunningham Tr. at 905); Dkt. No. 230-5 (McHugh Tr. at 64-65). In the three markets 11 where Black & Decker ran the PlantSmart DRTV commercial, PlantSmart was available in 12 a total of fourteen Home Depot stores. Dkt. No. 230-3 (Isch Tr. at 1131; McHugh Tr. at 13 1023). PlantSense argues that Black & Decker should have instead spent $500,000 to 14 produce a DRTV commercial and more than $1 million to air the commercial nationally. 15 Dkt. No. 232. 16 In response, Black & Decker asserts that the EasyBloom Agreement did not require 17 “drive” or “Tier A” treatment of PlantSmart. Dkt. No. 231. Instead, Black & Decker 18 agreed to “commit the marketing funds that it reasonably determines are necessary to 19 support the launch and sale” of PlantSmart and to make “reasonable efforts to support the 20 [PlantSmart] Product with marketing spends normal for their business.” Dkt. No. 231-5 21 (PX1, Section 3.2); see also Dkt. No. 220 at 8. Moreover, evidence was presented that it 22 was normal for budgets at Black & Decker to be changed. Dkt. No. 231-4 (McHugh Tr. at 23 993). Specifically, witnesses testified that if a DRTV test was successful, Black & Decker 24 would increase the DRTV budget and expand the campaign to additional markets; by 25 contrast, a poor DRTV test would result in decreased budget. Dkt. No. 231-8 (Pfister Tr. at 26 21-22); Dkt. No. 231-9 (Romjue Tr. at 246-48). The three-week DRTV test campaign for 27 PlantSmart resulted in 16 sales. Dkt. No. 231-4 (McHugh Tr. at 993; Weetenkamp Tr. at 28 1271). The evidence at trial did not demonstrate that other products were normally treated Case No. 12-cv-03922 NC ORDER DENYING MOTION FOR A NEW TRIAL 6 1 any differently. 2 Furthermore, Black & Decker asserts that the evidence at trial showed that the 3 marketing efforts and marketing funds for PlantSmart were extraordinary and exceeded 4 normal levels of spending for the rest of its product line. Dkt. No. 231. Evidence was 5 presented that, while the normal ratio of marketing spend to sale price for a new Black & 6 Decker product was approximately five percent, PlantSmart received more than one 7 hundred percent of the sale price in marketing spending. Dkt. No. 231-4 (Weetenkamp Tr. 8 at 1287). The marketing spend for PlantSmart represented 10 percent of the entire 9 marketing budget for Black & Decker’s 300 product outdoor product group. Id. at 1285-86. 10 In the relevant time period only approximately two percent of all new Black & Decker 11 products received either DRTV or traditional television commercials. Id. at 1292. The total 12 amount that Black & Decker spent on PlantSmart was $2.4 million, $642,000 of which was 13 spent on marketing and promotion. Id. at 1278. There was also extensive testimony about 14 Black & Decker’s efforts to market and sell PlantSmart, including among other things a 15 dedicated PlantsSmart-only email to hundreds of thousands of Black & Decker customers, 16 the first-ever (and only) inclusion of a Black & Decker product as a recommended holiday 17 gift by Home Depot in a communication directed to its customers, point-of-sale displays, 18 dedicated web site, videos, search-engine marketing, hundreds of articles, social media, and 19 blogger outreach. Dkt. No. 231-4 (McHugh Tr. at 962-984; Isch Tr. at 1127-28). There 20 was also testimony about the “blood, sweat and tears” that Black & Decker employees 21 devoted to PlantSmart, and that no matter how hard they were pushing PlantSmart, they 22 could not make store buyers take the product. Dkt. No. 231-9 (Romjue Tr. at 278-81). The 23 Court finds that this testimony was credible. 24 Black & Decker also argues that while it is possible to find a few Black & Decker 25 products that received more spending than PlantSmart, the products used by PlantSense in 26 its comparison had significant “big box” retailer penetration, unlike PlantSmart. Dkt. No. 27 231-4 (Weetenkamp Tr. at 1290-92). PlantSense did not present evidence of any other 28 Black & Decker product that received in excess of $1 million in DRTV spending after an Case No. 12-cv-03922 NC ORDER DENYING MOTION FOR A NEW TRIAL 7 1 unsuccessful DRTV test without meaningful retail penetration. In addition to the “scaled-down” DRTV campaign, PlantSense contends that Black & 2 3 Decker breached its contractual obligation to market PlantSmart when it composed an “exit 4 plan” and its media spend for the product went to zero beginning in about May 4, 2011. 5 Dkt. No. 232; Dkt. No. 230-3 (Cunningham Tr. at 925-26; Weetenkamp Tr. at 1283, 1317); 6 Dkt. No. 230-30 (PX39). But by mid-2011, PlantSmart had failed in a DRTV test campaign, retailers had 7 8 refused to stock it, Black & Decker had spent approximately $32 per unit attempting to 9 market products it had spent $19.50 to make, Black & Decker had an inventory of 53,000 10 unsold units, and Amazon would only take it below Black & Decker’s cost. Dkt. No. 231-4 11 (Weetenkamp Tr. at 1271, 1275-78, 1286-87). PlantSense did not present evidence 12 showing that it was normal for Black & Decker’s business to commit additional marketing 13 spend on a product in similar circumstances. After weighing the evidence and considering the credibility of the witnesses, the 14 15 Court finds that the clear weight of the evidence does not compel the conclusion that Black 16 & Decker breached its “substantive” marketing duties. 17 B. 18 19 The Clear Weight Of The Evidence Does Not Compel the Conclusion That Black & Decker’s Breach Caused PlantSense’s Harm. PlantSense also contends that a new trial is required because the clear weight of the 20 evidence demonstrates a proximate causal link between Black & Decker’s breach of its 21 marketing obligations and PlantSmart sales volumes. Dkt. No. 230-1. This contention is 22 based on the argument that the jury found that Black & Decker breached its “substantive” 23 marketing duties, which the Court already rejected. However, even if the jury did find that 24 Black & Decker breached its “substantive” marketing duties, PlantSense’s contention that 25 the clear weight of the evidence demonstrates the breach caused PlantSense’s harm 26 nevertheless fails. 27 In support of its contention, PlantSense points to evidence at trial that Black & 28 Decker’s own market research showed that there was consumer interest in PlantSmart, see Case No. 12-cv-03922 NC ORDER DENYING MOTION FOR A NEW TRIAL 8 1 e.g., Dkt. No. 230-9 (PX4); Dkt. No. 230-3 (Glenn Tr. at 279-81). Dkt. No. 231 at 12-13. 2 Additionally, Black & Decker recognized that it was imperative to create consumer 3 awareness for PlantSmart, see, e.g., Dkt. No. 230-31 at 10 (PX 44); Dkt. No. 230-3 (Glenn 4 Tr. at 442), and that its job was to convince the retailers that Black & Decker was behind 5 the product, see e.g., Dkt. No. 230-7 (Weetenkamp Tr. at 92). Dkt. No. 231 at 12-14. 6 There was evidence that Black & Decker projected a 50% increase in PlantSmart sales 7 volumes with a DRTV campaign, see e.g. Dkt. No. 230-6 (Pfister Tr. at 180-81, 191-94, 8 212-15); Dkt. No. 230-10 (PX8). Dkt. No. 231 at 12-14. PlantSense also relies on evidence 9 that during the thirty-two months in which PlantSmart and its predecessor products were 10 marketed, the product sold in every single month, whereas, upon Black & Decker’s 11 cancellation of marketing spend, struggled to sell any further units. Dkt. Nos. 230-1 at 1012 11, 22-23; 232. 13 In response, Black & Decker contends that PlantSense demonstrated no causal 14 connection between that theoretical marketing shortfall and actual damages. Dkt. No. 231. 15 At trial and in its pending motion, PlantSense rested much of its case on Black & Decker’s 16 projections and hopes that the product would sell if there is consumer awareness. Hopes 17 and projections, however, do not always materialize. PlantSense offered no evidence that 18 any additional reasonable marketing spending would have increased sales. In fact, there 19 was evidence to the contrary. There was extensive testimony about PlantSmart’s pre-Black 20 & Decker marketing and publicity successes, which included three appearances on The 21 Today Show. Despite these publicity successes, the monthly sales of PlantSmart remained 22 generally low. Dkt. No. 231-4 (Glenn Tr. at 526-37). There was also evidence presented of 23 a Power Point Presentation prepared by PlantSense’s former Vice President of Marketing 24 and Product Management, showing that 252% increased marketing spend by Black & 25 Decker compared to PlantSense coincided with decreased sales in at least some retail 26 outlets. Dkt. No. 231-4 (Byerley Tr. at 741, 769, 770-71); Dkt. No. 231-13 (PX5). 27 Moreover, the fact that PlantSmart sold during the thirty-two months in which it was 28 marketed does not equate with the claim that the product would have been profitable had Case No. 12-cv-03922 NC ORDER DENYING MOTION FOR A NEW TRIAL 9 1 Black & Decker made additional reasonable marketing spending. The jury was entitled to 2 conclude that PlantSense’s claim that any additional reasonable marketing spending would 3 have resulted in profits for PlantSense was speculative and not reasonably certain. The Court is also not convinced by PlantSense’s argument that by offering an 4 5 alternative expert opinion on damages, Black & Decker conceded causation. Dkt. No. 2306 1 at 23-24. Black & Decker’s damages expert made clear that he had not done any analysis 7 to determine whether sales volumes would have been different if Black & Decker had 8 performed any differently under the EasyBloom Agreement. Dkt. No. 231-4 (Ehlert Tr. 9 1227, 1250, 1252, 1259). Having considered the evidence and weighed the credibility of the witnesses, the 10 11 Court does not have a firm conviction that the jury has made a mistake. Accordingly, the 12 Court cannot find that the jury’s verdict was contrary to the clear weight of the evidence. 13 C. The Verdict Is Not an Improper “Compromise Verdict.” 14 As an alternative basis to grant a new trial, PlantSense contends that the jury’s finding 15 that Black & Decker breached the EasyBloom Agreement, coupled with its failure to award 16 any damages, “strongly suggest that the jury rendered an improper compromise verdict.” 17 Dkt. No. 230-1; see James v. Sheklanian, No. 08-cv-01943, 2010 WL 3504804, at *4 (E.D. 18 Cal. Sept. 7, 2010) (“A compromise verdict ‘is one reached when the jury, unable to agree 19 on liability, compromises that disagreement by entering a low award of damages.’” (quoting 20 National Railroad Passenger Corp. v. Koch Industries, Inc., 701 F.2d 108, 110 (10th Cir. 21 1983)). The facts in James, however, are starkly different. In James, the jury found that an 22 officer unlawfully used excessive force in the arrest of the plaintiff. 2010 WL 3504804, at 23 *1. But although it was undisputed that the plaintiff suffered injuries as a result of the 24 officer’s tackling, punching, and tasing, the jury found that the officer’s use of excessive 25 force was not the cause of harm to plaintiff. Id. at *5. 26 Here, PlantSense asserts that “no rational juror could find that PlantSense did not 27 suffer some amount of harm as a result of Black & Decker’s breach of the EasyBloom 28 Agreement.” Dkt. No. 230-1. The arguments on which PlantSense relies in support of this Case No. 12-cv-03922 NC ORDER DENYING MOTION FOR A NEW TRIAL 10 n onnection with its cont w tention that the verdict is against t t the 1 assertion were also made in co asons discu eight of the evidence an fail for the same rea nd t ussed above There is e. 2 clear we ndicates tha the jury re at eached an im mproper “c compromise verdict.” e 3 nothing here that in IV. CONCLUS ION C 4 5 Th Court fin that the jury’s verd in Black & Decker favor is not contrar to the he nds dict k r’s ry eight of the evidence an is not an improper “ nd n “compromi verdict.” Accordin ise ” ngly, 6 clear we nse’s motio for a new trial is DE on w ENIED. 7 PlantSen 8 IT IS SO OR T RDERED. 9 Date: March 20, 2015 10 0 ____ __________ __________ ____ Nath hanael M. C Cousins Unit States M ted Magistrate J Judge 11 1 12 2 13 3 14 4 15 5 16 6 17 7 18 8 19 9 20 0 21 1 22 2 23 3 24 4 25 5 26 6 27 7 28 8 Case No. 12-cv-0392 NC 22 ORDER DENYING MOTION R G FOR A NEW TRIAL N L 11

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