Barranco v. 3D Systems Corporation et al

Filing 458

DECISION REGARDING POST-REMAND ISSUES - Signed by JUDGE LESLIE E. KOBAYASHI on 8/31/2020. On the basis of the foregoing, this Court CONCLUDES that no further proceedings are necessary in light of the Ninth Circuit's March 12, 2020 opinion. After the second amended judgment is issued, the Clerk's Office is DIRECTED to close this case. (emt, )

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UNITED STATES DISTRICT COURT
DISTRICT OF HAWAII

RONALD BARRANCO,

CIV. NO. 13-00412 LEK-RT

Plaintiff,
vs.
3D SYSTEMS CORPORATION, A
DELAWARE CORPORATION; AND 3D
SYSTEMS, INC., A CALIFORNIA
CORPORATION;
Defendants.

DECISION REGARDING POST-REMAND ISSUES
On March 12, 2020, the Ninth Circuit Court of Appeals
issued an opinion affirming this Court’s evidentiary rulings
during the jury trial but reversing and vacating the monetary
judgment that was issued following a bench trial to determine
the equitable relief to be awarded on the counterclaim (“Ninth
Circuit Opinion”).

952 F.3d 1122.

On May 21, 2020,

Defendants/Counterclaimants 3D Systems Corporation and 3D
Systems, Inc. (collectively “3D Systems” or “Defendants”) and
Plaintiff/Counterclaim Defendant Ronald Barranco (“Barranco” or
“Plaintiff”) filed their respective briefs on the issues
remaining after remand (“3D Remand Brief” and “Barranco Remand

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Brief”).

[Dkt. nos. 450,1 451.]

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3D Systems and Barranco filed

their respective response briefs (“3D Response Brief” and
“Barranco Response Brief”) on June 19, 2020.
456.]

[Dkt. no. 455,

For the reasons set forth below, this Court concludes

that no further proceedings are necessary in this case.

A

second amended judgment will be issued consistent with this
Order, and the case will be closed.
BACKGROUND
Barranco initiated this action on August 23, 2013.
[Complaint (dkt. no. 1).]

3D Systems filed counterclaims on

August 19, 2014, amended counterclaims on September 8, 2014, and
it filed further amended counterclaims (“Second Amended
Counterclaims”) on November 5, 2014.

[Dkt. nos. 89, 101, 118.]

On May 17, 2016, a jury trial commenced.
no. 251.]

[Minutes, dkt.

The claims that went to trial were: 1) Barranco’s

claims for breach of contract, breach of the implied covenant of
good faith and fair dealing, and unjust enrichment; see Order
Granting in Part and Denying in Part Defs.’ Motion for Summary
Judgment on All Claims Against Them, filed 1/30/15 (dkt.
no. 140);2 and 2) the claims in 3D Systems’ Second Amended
Counterclaims – a breach of contract claim alleging Barranco

1

An errata to the 3D Remand Brief was filed on May 28,
2020. [Dkt. no. 454.]
2 The summary judgment order is also available at 2015 WL
419687.
2

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violated the non-complete provision in their Purchase and Sale
Agreement (“PSA” and “Non-Compete Counterclaim”) and a claim
alleging Barranco failed to completely convey all of the assets
covered by the PSA (“Failure to Convey Counterclaim”).
On May 26, 2016, the case went to the jury.
dkt. no. 278.]

[Minutes,

On May 27, 2016, the jury reached a verdict in

favor of 3D Systems on all of Barranco’s claims that were
litigated at trial.

[Special Verdict Form, dkt. no. 282.]

The

jury also found that Barranco breached his promise not to
compete with 3D Systems for five years after he signed the PSA.
[Id. at 6.]
Judgment as a matter of law was later granted in
Barranco’s favor as to the Failure to Convey Counterclaim.

[EO:

Court Ruling Regarding the Remaining Issues in this Case, filed
6/22/16 (dkt. no. 287).]

Barranco also moved for judgment as a

matter of law on 3D Systems’ Non-Compete Counterclaim, but the
motion was denied because this Court concluded that the verdict
was supported by evidence showing Barranco violated the noncompete provision.

[Order Denying Pltf.’s Oral Motion for

Judgment as a Matter of Law, filed 5/9/17 (dkt. no. 300)
(“5/9/17 Order”).3]

Because the PSA stated Barranco could breach

the non-compete provision by developing a competing product or

3

The 5/9/17 Order is available at 2017 WL 1900970.
3

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by assisting another entity in developing or providing a
competing product, a violation did not require evidence that the
violation caused either Barranco to be benefitted or 3D Systems
to be harmed.

5/9/17 Order, 2017 WL 1900970, at *4-5.

This

Court also ruled that 3D Systems were entitled to an equitable
accounting because: that was one of the remedies provided for in
the PSA for a violation of the non-complete provision; and the
issues related to the Non-Compete Counterclaim were complex
enough to warrant an equitable accounting.

Id. at *5.

A nonjury trial was held on November 20, 2017 to
determine the equitable relief that 3D Systems were entitled to
because of Barranco’s violation of the non-compete provision.
[Minutes (dkt. no. 382).]

On March 30, 2018, the Findings of

Fact and Conclusions of Law and Order (“FOF/COL”) were issued.
[Dkt. no. 391.4]

Ultimately, this Court concluded that, as a

result of Barranco’s breach of the non-compete provision,
“3D Systems [were] entitled to invoke the equity jurisdiction of
this Court and to demand an equitable accounting,” but, after
performing the accounting, this Court found “Barranco received
no earnings, profits, or other benefits arising from his
breach.”

FOF/COL, 307 F. Supp. 3d at 1103.

However, this Court

ordered Barranco to disgorge a total of $522,860.24, consisting

4

The FOF/COL is also available at 307 F. Supp. 3d 1075.
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of salary and various payments, and it awarded prejudgment and
post-judgment interest to 3D Systems.
issued on April 2, 2018.

Id.

A judgment was

[Dkt. no. 392.]

On April 19, 2018, Barranco filed a motion for relief
under Fed. R. Civ. P. 52(b) and 59(e).

[Dkt. no. 398.]

On

August 13, 2018, an order granting the motion in part and
denying it in part was issued (“8/13/18 Order”).
no. 435.5]

[Dkt.

The 8/13/18 Order amended the disgorgement amount in

the FOF/COL to $462,451.24, and another amount, but only if a
buyout payment was due and owing to Barranco under the PSA.
2018 WL 3833499, at *2.
Final judgment was entered on September 13, 2018.
[Amended Judgment in a Civil Case (“Amended Judgment”), filed
9/13/18 (dkt. no. 443).]

The Amended Judgment included the

following amounts:
-the award to 3D Systems on the Non-Compete Counterclaim in the
amount of $462,451.24;
-taxable costs of $36,424.93 and nontaxable costs of $71,642.97;
-attorneys’ fees of $1,299,408.50; and
-prejudgment interest of $308,385.29, and post-judgment interest
of $3,406.85.
[Id. at 3.]

Thus, the total amount of the Amended Judgment was

$2,181,719.78.

5

[Id.]

The 8/13/18 order is also available at 2018 WL 3833499.
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I.

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CV 13-00411
Simultaneously with the Complaint in this case,

Barranco and Print3D Corporation (“Print3D”) filed an action
against 3D Systems and Damon Gregoire, related to other
agreements not at issue in the instant case.

[Barranco, et al.

v. 3D Sys. Corp., et al., CV 13-00411 LEK-RLP (“CV 13-411”),
Complaint, filed 8/23/13 (dkt. no. 1).]

This Court found “the

parties entered into a valid and enforceable agreement to
arbitrate with AAA, so long as AAA is still in existence, with
all aspects of the arbitration proceeding to take place in
Charlotte, North Carolina.”

[CV 13-411, Order Denying

Defendants’ Motion to Dismiss, etc. (“CV 13-411 Order”), filed
2/28/14 (dkt. no. 42), at 23.6]

This Court then transferred

venue to the United States District Court for the Western
District of North Carolina for further proceedings.

CV 13-411

Order, 2014 WL 806263, at *11.
After the transfer, the case in the Western District
of North Carolina (“North Carolina Action”) was stayed pending
arbitration.

A five-day arbitration hearing was held in

Charlotte, and the arbitrator issued the original award on
September 28, 2015.
2015.

A modified award was issued on October 16,

Barranco v. 3D Sys. Corp., 3:14-cv-00188-RJC-DSC, 2016 WL

6

The CV 13-411 Order is also available at 2014 WL 806263.
6

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4546449, at *2 (W.D.N.C. Aug. 31, 2016).

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The district court

confirmed the modified award and the entry of “judgment in favor
of Plaintiff and against Defendants, jointly and severally, in
the principal amount of $11,281,681.46 as set forth in the
Modified Award, plus interest as allowed by applicable law.”
Id. at *6.

The district court, however, denied the plaintiffs’

motion for attorneys’ fees and costs.

Id.

The district court

entered its final judgment (“North Carolina Judgment”) on
August 31, 2016.
appeal.

The North Carolina Judgment was affirmed on

Barranco v. 3D Sys. Corp., 734 F. App’x 885 (4th Cir.

2018).
The parties to the North Carolina Action ultimately
stipulated to a set-off of the amount of the Amended Judgment in
the instant case against the amounts that remained due to the
plaintiffs under the North Carolina Judgment.

See 3D Remand

Brief, Decl. of Counsel, Exh. A (Consent Stipulation Resolving
Motion for Setoff of Judgment, filed in the North Carolina
Judgment on 9/28/18).

Thus, the $2,181.719.78 due to 3D Systems

under the Amended Judgment in this case was set off from the
$2,282,919.69 that was still outstanding on the North Carolina
judgment after an August 2, 2018 payment.
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7

[Id. at

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II.

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Barranco’s Appeal
Barranco filed his Notice of Appeal from the Amended

Judgment in the instant case on September 5, 2018, and he filed
an Amended Notice of Appeal on September 19, 2018.
nos. 438, 444.]

[Dkt.

On appeal, the Ninth Circuit rejected both of

Barranco’s evidentiary challenges, affirming both the exclusion
of the modified arbitration award confirmed in the North
Carolina Action and the exclusion of evidence regarding
Barranco’s damages.

Ninth Circuit Opinion, 952 F.3d at 1127-29.

However, the Ninth Circuit agreed with Barranco that this Court
“erred in awarding 3D Systems an equitable remedy on its legal
claim for damages resulting from Barranco’s breach of the” noncompete provision.

Id. at 1131.

The Ninth Circuit held that

the determination of 3D Systems’ remedies for Barranco’s breach
of the non-compete provision was not so complex that an
equitable accounting was warranted.

Id. at 1129-30.

The Ninth

Circuit also adopted the rule, previously accepted by other
circuit courts, that “the terms of a contract alone cannot
require a court to grant equitable relief.”

Id. at 1130.

Thus,

the monetary judgment in favor of 3D Systems on the Non-Compete
Counterclaim was reversed and vacated.

Id. at 1131.

After the Ninth Circuit mandate was issued, [filed
4/17/20 (dkt. no. 447),] this Court directed the parties to file
briefs addressing what relief 3D Systems were entitled to, in
8

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light of the Ninth Circuit Opinion.
4/21/20 (dkt. no. 448).]

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[Minute Order, filed

3D Systems’ position is that they are

entitled to a jury trial to determine their damages for their
Non-Compete Counterclaim.

Barranco’s position is that no

further proceedings are necessary, and he is entitled to a
judgment in his favor, requiring 3D Systems to pay him the
amount that they were credited for in the Amended Judgment in
this case against the North Carolina Judgment.
DISCUSSION
3D Systems’ Non-Compete Counterclaim alleged:
51. As a direct and proximate result of
Barranco’s material breaches of the PSA’s NonCompete [provision], 3D Inc. has been damaged and
is entitled to recover incidental and
consequential damages from Barranco in an amount
to be determined at trial.
52. As a direct and proximate result of
Barranco’s material breaches of the PSA’s NonCompete [provision], 3D Inc. is also entitled to
specific performance of the PSA and Non-Compete
[provision], which requires Barranco to (1)
comply with the Non-Compete [provision] until
April 19, 2016; (2) immediately cease and desist
from engaging in Competition; (3) immediately
cease and desist from being an employee, agent or
consultant of, or having any proprietary or other
equity interest in, or otherwise participating or
assisting in the business of, any person, firm or
business that engages in any Competition; and
(4) provide an accounting of earnings, profits
and other benefits arising from his violation of
the Non-Compete [provision].

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[Second Amended Counterclaim at pgs. 11-12.]

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Thus, 3D Systems

sought both legal remedies and equitable remedies for Barranco’s
breach of the non-compete provision.
This continued to be 3D Systems’ theory at the time of
the jury trial.

See 3D Systems’ Trial Brief, filed 5/3/16 (dkt.

no. 231), at 38 (“As a result of Barranco’s violations,
3D Systems is entitled to specific performance of the NonCompete [provision], injunctive relief, and actual damages to be
proven at trial.”); id. at 39-40 (arguing 3D Systems was
entitled to an accounting and “reserves the right to assert
additional damages as may be proven at trial”).

However, at

trial, 3D Systems failed to present evidence of the monetary
damages they allegedly incurred, which would have been the basis
for their request for an award of legal damages.

At the close

of 3D Systems’ case, Barranco moved for judgment as a matter of
law on the counterclaims.

As to the Non-Compete Counterclaim,

Barranco argued there was no evidence of damages from his
alleged breach of the non-compete provision.

[Trans. of Jury

Trial – Day 4 (“5/23/16 Tr. Trans.”), filed 10/13/17 (dkt.
no. 339), at 140, 143-44.]

3D Systems responded that there was

evidence that Andrew Johnson, 3D Systems’ Chief Legal Officer,
incurred damages in the form of attorneys’ fees as a result of
pursuing the Non-Compete Counterclaim.

This Court indicated

that such attorneys’ fees were not recoverable as damages in a
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breach of contract claim, but allowed 3D Systems to submit
additional case law on the issue.

[Id. at 145-46.]

3D Systems

also argued Mr. Johnson gave testimony about damages other than
attorneys’ fees, but, at that time, their counsel could not
identify what Mr. Johnson specifically described.

[Id. at 148.]

3D Systems’ written response to Barranco’s motion identified
neither case law supporting their position that attorneys’ fees
constituted damages nor Mr. Johnson’s testimony identifying
damages other than attorneys’ fees.

[3D Systems’ Opp. to

Pltf.’s Motion for Judgment as a Matter of Law on Defs.’
Counterclaims, filed 5/24/16 (dkt. no. 269).]

Instead,

3D Systems argued they were entitled to the equitable remedies
of specific performance and an accounting because those were
among the specified remedies in the PSA for a breach of the noncompete provision.

3D Systems also argued an accounting

constituted a legal remedy, not an equitable remedy, when
provided for in a contract.

[Id. at 3-7.]

3D Systems argued

the jury should merely determine whether a breach of the noncompete provision occurred, and this Court should determine the
remedy at a later proceeding.

[Id. at 7-8.]

Thus, the issue of

3D Systems’ damages as a result of Barranco’s breach of the noncompete provision was not presented to the jury for decision.
See Special Verdict Form at 4-5.

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The Ninth Circuit Opinion ultimately rejected
3D Systems’ position that equitable remedies are available under
the circumstances of this case.

3D Systems argue they are

entitled to a jury trial on damages because they relied on the
provision in the PSA providing for such remedies and the lack of
any binding authority at the time holding that such provisions
were unenforceable.

Although this was the first time the Ninth

Circuit adopted the rule “that the terms of a contract alone
cannot require a court to grant equitable relief,” Ninth Circuit
Opinion, 952 F.3d at 1130, nothing prevented 3D Systems from
pursuing legal remedies for the Non-Compete Counterclaim during
the jury trial.7

Prior to the jury trial, 3D Systems’ position

was that they were entitled to both legal remedies and equitable
remedies.

At trial, they could not, or chose not to, present

evidence establishing their damages for their legal remedies.
Although 3D Systems could have presented the determination of
legal remedies to the jury, they did not do so, effectively
conceding that they could not establish damages to support a
legal remedy for the Non-Compete Counterclaim.

7

The Ninth

In addition, nothing prevented 3D Systems from bringing a
counterclaim that asserted an equitable claim, such as an unjust
enrichment claim for a claim for breach of the duty of loyalty,
in addition to their contractual claim for breach of the noncompete provision. See Ninth Circuit Opinion, 952 F.3d at 1130
(discussing Hawai`i case law illustrating that “equitable relief
[is] available in certain instances even when there is an
express contract”).
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Circuit’s subsequent holding that the remedy provision of the
PSA could not compel a court to grant equitable relief does not
relieve 3D Systems from this concession.

This Court therefore

rejects 3D Systems’ contention that they are entitled to a postremand jury trial on damages for the Non-Compete Counterclaim.
In light of the Ninth Circuit’s holding that
3D Systems are not entitled to equitable relief on the NonCompete Counterclaim and 3D Systems’ prior concession that they
cannot establish damages to support a legal remedy for the NonCompete Counterclaim, the Non-Compete Counterclaim fails as a
matter of law because damages are an essential element of the
claim.

See, e.g., Breast Care Ctr. of Hawai`i LLC v. Fujifilm

Med. Sys. U.S.A., Inc., CIVIL NO. 17-443 JAO-WRP, 2019 WL
2146244, at *7 (D. Hawai`i May 16, 2019) (“To prevail on a
breach of contract claim, a plaintiff must establish damages.”
(citing Chuck Jones and MacLaren v. Williams, 101 Haw. 486, 500
(2003) (monetary damages a material element of breach of
contract claim); Choy v. Cont’l Cas. Co., No. CV 15-00281
SOM/KSC, 2015 WL 7588233, at *4 (D. Haw. Nov. 25, 2015) (“A
breach of contract claim requires a showing of damages.”))).8
Barranco is therefore entitled to judgment as a matter of law as
to the Non-Compete Counterclaim.

8

The motion for reconsideration of 2019 WL 2146244 was
denied. 2019 WL 3231739 (July 18, 2019).
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A second amended judgment will be issued, reflecting
this Court’s ruling on the Non-Compete Counterclaim and stating
that Barranco is only obligated to pay 3D Systems the following
amounts: taxable costs of $36,424.93; nontaxable costs of
$71,642.97; and attorneys’ fees of $1,299,408.50.

Barranco does

not contend the Ninth Circuit Opinion eliminated his liability
for these amounts.

[Barranco Remand Brief at 2-3.]

Moreover,

3D Systems remains the prevailing party as to the claims that
Barranco alleged in the Complaint, and the Ninth Circuit Opinion
does not change 3D Systems’ entitlement to attorneys’ fees and
costs incurred in relation to those claims.

Cf. Bill of Costs,

filed 5/31/18 (dkt. no. 416) (reflecting taxation of costs);
Order Denying Pltf.’s Partial Objections and Adopting, as
Modified, the Magistrate Judge’s Findings and Recommendation,
filed 8/16/18 (dkt. no. 437) (regarding findings and
recommendation, filed 6/15/18 (dkt. no. 423)).
However, this Court declines to address Barranco’s
argument that he is entitled to prejudgment and post-judgment
interest on the amounts that were reflected in the Amended
Judgment that will be eliminated in the second amended judgment.
Because Barranco “paid” his liability reflected in the Amended
Judgment through a set-off of the North Carolina Judgment, it is
the district court in the North Carolina Action that must make
any adjustments to the set-off.

Accord Legg v. McCarter, CIVIL
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NO. 17-00511 DKW-KJM, 2017 WL 5309686, at *4 (D. Hawai`i
Nov. 13, 2017) (stating the district court “may not ‘re-open’
any terminated bankruptcy proceeding involving [the plaintiff]
or his ‘Estate’ in the manner requested” (citing Snipes v.
Hacker, 2011 WL 13196551, at *2 (D. Haw. Oct. 25, 2011) (denying
relief and terminating case in which plaintiff sought
reconsideration of Texas bankruptcy action, and holding that
plaintiff’s “right to relief, if any, rested with the Texas
Bankruptcy Court, the Texas District Court, and the Fifth
Circuit Court of Appeals”))).

Thus, this Court makes no

findings or conclusions regarding the effect of the second
amended judgment on the North Carolina Judgment.
CONCLUSION
On the basis of the foregoing, this Court CONCLUDES
that no further proceedings are necessary in light of the Ninth
Circuit’s March 12, 2020 opinion.

After the second amended

judgment is issued, the Clerk’s Office is DIRECTED to close this
case.

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IT IS SO ORDERED.
DATED AT HONOLULU, HAWAI`I, August 31, 2020.

RONALD BARRANCO VS. 3D SYSTEMS CORPORATION, ET AL; CV 13-00412
LEK-RT; DECISION REGARDING POST REMAND ISSUES

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