J.M Smith Corporation v. Ciolino Pharmacy Wholesale Distributors, LLC et al

Filing 474

ORDER denying 438 Motion for Judgment as a Matter of Law; denying 438 Motion for New Trial; denying 439 Motion for New Trial; denying 461 Motion for relief from judgment. Signed by Judge Jay C. Zainey. (Reference: all cases)(jrc)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
J. M. SMITH CORPORATION
d/b/a SMITH DRUG COMPANY

CIVIL ACTION

NO: 10-1483
c/w 10-1786
Ref: Both

VERSUS

CIOLINO PHARMACY WHOLESALE
DISTRIBUTORS, LLC, ET AL.

SECTION: "A" (4)

ORDER
Before the Court are the following motions, filed by Ciolino
Pharmacy Wholesale Distributors, LLC, et al.: Renewed Motion for
Judgment as a Matter of Law and Motion for New Trial (Rec. Doc.
438); Motion for New Trial (Rec. Doc. 439); Motion for Relief from
Judgment (Rec. Doc. 461).

The motions are opposed and are before

the Court on the briefs without oral argument.

For the reasons

that follow, the motions are DENIED.
I. BACKGROUND
This matter commenced in 2010 as a claim by J.M. Smith
Corporation

("Smith")

against

Ciolino

Pharmacy

Wholesale

Distributors, LLC (referred to, along with its other related
business entities, collectively as "Ciolino"), under Louisiana
Revised Statute 9:2781.

Smith sought payment of $654,336.51 for

pharmaceutical products purchased by and delivered to Ciolino on
open account.

In response, Ciolino filed breach of contract and

other counter-claims against Smith. The sole basis of this Court's
jurisdiction over all the claims was diversity jurisdiction.

This matter was tried to a jury beginning on November 11,
2013, and lasting a total of four days.

At the conclusion of the

trial, the jury returned a verdict awarding Smith $654,336.51 on
its open account claim and denying all of Ciolino's counter-claims.
The Court subsequently entered a judgment.1
Ciolino has filed the instant post-trial motions.

In the

Renewed Motion for Judgment as a Matter of Law and Motion for New
Trial (Rec. Doc. 438), Ciolino seeks judgment as a matter of law
or, in the alternative, a new trial on Smith's open account claim.
In the Motion for New Trial (Rec. Doc. 439), Ciolino seeks a new
trial on its breach of contract claim.

In the Motion for Relief

from Judgment (Rec. Doc. 461), Ciolino seeks relief from the
Court's judgment on the basis that Smith withheld certain documents
in the course of discovery.
II. APPLICABLE LAW
a.) Rule 50 of the Federal Rules of Civil Procedure
Rule 50 establishes the requirements for a party in a civil
jury trial to challenge the sufficiency of evidence either before
submission to the jury or after the jury’s verdict.2

If a court

does not grant a party’s motion for judgment as a matter of law
during trial, the motion may be renewed after the jury’s verdict.3
1

Rec. Doc. 429.

2

Unitherm Food Systems, Inc. v. Swift-Eckrich, Inc., 546
U.S. 394, 399 (2006).
3

Id.
2

A court may grant this renewed motion if “the jury's factual
findings are not supported by substantial evidence, or if the legal
conclusions implied from the jury's verdict cannot in law be
supported by those findings.”4
When deciding a motion for judgment as a matter of law, a
court should consider all the evidence "in the light and with all
reasonable inferences most favorable to the party opposed to the
motion.”5

However, a court may not determine the credibility of a

witness nor weigh the evidence presented at trial because those
assessments are the functions of the jury.6

The renewed motion for

judgment as a matter of law will be denied if the party opposing
the motion can establish a conflict in the evidence on each element
of the moving party’s claim.7
The Fifth Circuit has expressed wariness in upsetting jury
verdicts, stating that jury verdicts will be upheld "unless the
facts and inferences point so strongly and so overwhelmingly in
favor of one party that reasonable [jurors] could not arrive at any

4

Am. Home Assur. Co. v. United Space Alliance, LLC, 378 F.3d
482, 488 (5th Cir. 2004).
5

Mosley v. Excel Corp., 109 F.3d 1006, 1008-09 (5th Cir.
1997) (quoting Boeing Co. v. Shipman, 411 F.2d 365, 374 (5th Cir.
1969)).
6

Id. at 1009.

7

Goodner v. Hyundai Motor Co., 650 F.3d 1034, 1039 (5th Cir.
2011).
3

verdict to the contrary."8
if

there

is

"no

legally

The jury verdict can be overturned only
sufficient

evidentiary

basis

for

a

reasonable jury to find as the jury did."9
b.) Rule 59 of the Federal Rules of Civil Procedure
When renewing a Rule 50 motion for judgment as a matter of law
after the jury has rendered a verdict, a party may include a joint
request for a new trial under Rule 59.10

At the request of either

party, a court may grant a new trial “for any reason for which a
new trial has therefore been granted in an action at law in federal
court.”11 The Fifth Circuit has granted a new trial when a “verdict
is against the weight of the evidence, the damages awarded are
excessive, the trial was unfair, or prejudicial error was committed
in its course."12
When an action based on state law is tried in federal court
due to diversity of citizenship, the court must apply the state’s
law when granting a new trial.13

As such, Louisiana law is

8

Id. (quoting Travelers Cas. & Sur. Co. of Am. v. Ernst &
Young LLP, 542 F.3d 475, 481 (5th Cir. 2008); Cousin v. Trans
Union Corp., 246 F.3d 359, 366 (5th Cir. 2001)).
9

Id. at 1039-40 (quoting Foradori v. Harris, 523 F.3d 477,
485 (5th Cir. 2008)).
10

Fed. R. Civ. P. 50(b).

11

Fed. R. Civ. P. 59(a)(1)(A).

12

Smith v. Transworld Drilling Co., 773 F.2d 610, 613 (5th
Cir. 1985).
13

Fair v. Allen, 669 F.3d 601, 604 (5th Cir. 2012).
4

applicable here.

Under the Louisiana Code of Civil Procedure, a

new trial shall be granted “when the verdict appears clearly
contrary to the law and the evidence.”14

Also, a court may grant

a new trial “in any case if there is good ground therefor, except
as otherwise provided by law.”15
The determination of whether or not to grant a new trial
"rests within the wide discretion of the trial court."16

However,

the trial court's discretion is limited:
The fact that a determination on a motion for new trial
involves judicial discretion, however, does not imply
that the trial court can freely interfere with any
verdict with which it disagrees. The discretionary power
to grant a new trial must be exercised with considerable
caution.... Fact finding is the province of the jury, and
the trial court must not overstep its duty in overseeing
the administration of justice and unnecessarily usurp the
jury's responsibility. A motion for new trial solely on
the basis of being contrary to the evidence is directed
squarely at the accuracy of the jury's factual
determinations and must be viewed in that light. Thus,
the jury's verdict should not be set aside if it is
supportable by any fair interpretation of the evidence.17
c.) Rule 60 of the Federal Rules of Civil Procedure
Rule 60(b) provides the following grounds for relief from an
Order of the Court:
(1)

mistake,

inadvertence,

14

or

excusable

La. Code Civ. P. art 1972.

15

surprise,

La. Code Civ. P. art 1973.

16

Davis v. Wal-Mart Stores, Inc., 2000-0445 (La. 11/28/00),
774 So. 2d 84, 93.
17

Id. (quoting Gibson v. Bossier City Gen. Hosp., 594 So.2d
1332 (La. App. 2 Cir. 1991)).
5

neglect; (2) newly discovered evidence that, with
reasonable diligence, could not have been discovered in
time to move for a new trial under Rule 59(b); (3) fraud
(whether previously called intrinsic or extrinsic),
misrepresentation, or misconduct by an opposing party;
(4) the judgment is void; (5) the judgment has been
satisfied, released or discharged; it is based on an
earlier judgment that has been reversed or vacated; or
applying it prospectively is no longer equitable; or (6)
any other reason that justifies relief.18
The purpose of Rule 60(b) is to balance the principle of
finality of a judgment with the interest of the court in seeing
that justice is done in light of all the facts.19

“[T]he decision

to grant or deny relief under Rule 60(b) lies within the sound
discretion of the district court and will be reversed only for
abuse of that discretion."20
III. ANALYSIS
a.) Renewed Motion for Judgment as a Matter of Law and Motion
for New Trial (Rec. Doc. 438)
In this motion, Ciolino disputes the jury's verdict in favor
of Smith on Smith's open account claim under Louisiana Revised
Statute 9:2781. Ciolino contends that the jury's verdict was based
on insufficient evidence and was contrary to the uncontroverted
evidence that Ciolino was entitled to certain credits.

Ciolino

makes two separate arguments as to why it was entitled to account
18

Fed. R. Civ. P. 60(b).

19

Seven Elves, Inc. v. Eskenazi, 635 F.2d 396, 401 (5th Cir.

1981).
20

Edwards v. City of Houston, 78 F.3d 983, 995 (5th Cir.
1996) (en banc) (citations omitted).
6

credits that were not reflected in the jury's verdict.
First, Ciolino argues that the evidence showed that a Smith
employee by the name of Russell Gray offered certain rebates to
Ciolino in the sale of pharmaceuticals.

While Smith denied at

trial that Gray had the authority to make such offerings, Ciolino
contends that Gray was cloaked with actual or apparent authority,
which should hold Smith liable for his actions.

Ciolino argues

that it is entitled to a new trial because the jury did not take
into account the evidence of these credits when rendering the
verdict.

On the other hand, Smith argues that the testimony of

several witnesses at trial, as well as documentary evidence,
revealed that Gray was not allowed to and did not offer any rebates
to Ciolino.
Next,
Smith's

Ciolino

account

argues

record

as

that
to

there
the

existed
amount

inaccuracies

owed

by

in

Ciolino.

Specifically, Ciolino argues that account documents showed that
Smith invoiced certain amounts onto the account prior to issuing
rebates to Ciolino for those same amounts.

According to Ciolino,

a Smith employee by the name of Anthony Thompson, on crossexamination at trial, was unable to explain identical amounts being
invoiced on the account and then later appearing as rebates.
Ciolino argues that the judgment should be amended to reflect a
deduction of $2,323.05 to account for these rebates or, in the
alternative, a new trial on this issue should be granted.
Smith disputes Ciolino's entitlement to these rebates.
7

Smith

argues that the evidence at trial showed that Ciolino failed to
meet performance benchmarks that were required to receive the
rebates and also that Ciolino made "non-sufficient funds" payments
which forfeited any rebates pursuant to the terms of Ciolino's
credit application.
Once Smith, as the creditor, established a prima facie case of
the existence of an open account at trial, the burden shifted to
Ciolino, as the debtor, to prove the inaccuracy of the account or
that certain credits were due.21

The amount of an account is a

question of fact to be determined by the jury.22
Having considered the rebate issues raised by Ciolino, as well
as the applicable law, the Court is not persuaded that the findings
of the jury should be altered or disturbed in any way.

Ciolino's

motion is DENIED.
b.) Motion for New Trial (Rec. Doc. 439)
In this motion, Ciolino disputes the jury's verdict in favor
of Smith on Ciolino's breach of contract claims.

Ciolino makes

three separate arguments as to why it is entitled to a new trial.
Ciolino's first argument pertains to the Court's decision to

21

See, e.g., Deutsch, Kerrigan & Stiles v. Fagan, 95-0811
(La. App. 1 Cir. 12/15/95), 665 So. 2d 1316, 1320, writ denied,
96-0194 (La. 3/15/96), 669 So. 2d 418 ("Once a prima facie case
has been established by the plaintiff-creditor, the burden shifts
to the debtor to prove the inaccuracy of the account or to prove
that the debtor is entitled to certain credits.").
22

Id. ("The amount of an account is a question of fact which
may not be disturbed absent manifest error.").
8

exclude from evidence a pricing list spreadsheet, which Ciolino
contends would have helped prove the existence of an oral contract
with

Smith.

Ciolino

claims

that

it

attempted

to

offer

the

spreadsheet at trial and had witnesses who were prepared to
authenticate it, in accordance with the Court's orders.23

However,

Ciolino argues that the Court erroneously ordered that the trial
proceed without the spreadsheet.
Prior to trial, the Court ordered the following, pertaining to
the spreadsheet at issue: "The expert can refer to any documents
s/he referred to, or relied upon in her/his report, but the
documents themselves will not be admitted into evidence."24

In

accordance with this order, Ciolino's expert offered testimony at
the

trial

in

reference

to

the

pricing

list

spreadsheet.

Furthermore, Ciolino employees testified as to their understanding
of any pricing agreement between the parties. As a result, any
information from the spreadsheet was made available to the jury
through trial testimony, rendering harmless any possible error
caused by the exclusion of the spreadsheet.25
23

Prior to trial, the Court ordered that all objections as to
the authenticity of documents were sustained, subject to the
right of the parties to authenticate documents at trial. Rec.
Doc. 397, at pg 3.
24

Rec. Doc. 402, at pg 2.

25

See Fed. R. Civ. P. 61 ("Unless justice requires otherwise,
no error in admitting or excluding evidence--or any other error
by the court or a party--is ground for granting a new trial, for
setting aside a verdict, or for vacating, modifying, or otherwise
disturbing a judgment or order. At every stage of the proceeding,
9

Ciolino's second argument in its motion for a new trial
pertains to the verdict form's section on joint venture.

Smith

argues that under Question 3a of the verdict form, if the jury
found Smith to be unaware of the joint venture between the Ciolino
Pharmacy Wholesale Distributors, LLC ("CPWD") and JJK Wholesaler
Distributors, LLC ("JJK") entities, then the jury was instructed to
consider only damages to CPWD, rather than to the joint venture.
Ciolino argues that under the proper law, it did not need to prove
that Smith was aware of the joint venture in order for Smith to be
found liable to the joint venture; therefore, the verdict form was
improper.
In light of the instruction that follows Question 3b of the
verdict form, the Court agrees with Ciolino's contentions regarding
the verdict form.26

But because the Court is persuaded that the

jury's answers to certain other questions on the form preclude
the court must disregard all errors and defects that do not
affect any party's substantial rights."); Peters v. Five Star
Marine Serv., 898 F.2d 448, 450 (5th Cir. 1990) (All of the
information available from the excluded reports was made
available to the jury through the testimony.).
26

The Court takes no position on the parties' respective and
conflicting contentions regarding the discussions at the charge
conference that took place in chambers. The Court does
specifically recall, however, that it had reservations regarding
Smith's position as to the legal significance of the answer to
Question 3a. Therefore, it was the Court's intention that
Question 3a be inconsequential to the jury's answers to the
subsequent questions on the verdict form in the event that the
Court were to determine post-trial that Smith's position with
respect to Question 3a was incorrect. Unfortunately, the form
instruction that follows Question 3b does render the answer to
Question 3a relevant to the issue of damages.
10

Ciolino from recovering the damages that JJK sustained and imputes
to the joint venture, any error with the verdict form was harmless.
The Court assumes at this juncture that a joint venture did in
fact exist between CPWD and JJK ("CPWD/JJK").

According to

Ciolino's theory of the case, CPWD was the buying arm of the joint
venture and JJK was the selling arm of the operation.

Ciolino

argues that the breach of contract claim against Smith is governed
by the Louisiana Supreme Court case of Woodlawn Park Limited
Partnership v. Doster Contruction Co.27

Woodlawn held that an

undisclosed principal has a right of action against the party who
contracted with the undisclosed principal's agent. Fitting its own
case into the mold of Woodlawn, Ciolino contends that CPWD was
acting as the agent for the CPWD/JJK joint venture, which was an
undisclosed principal, when CPWD contracted with Smith.28
27

Woodlawn Park Limited Partnership v. Doster Contruction
Co., 623 So. 2d 645 (La. 1993).
28

The Court notes that this contention is contrary to the
theory of the case that Ciolino had espoused up until the time
that Smith moved for summary judgment on Ciolino's and JJK's
breach of contract claims. Smith had argued in support of summary
judgment that the CPWD entity had sustained no damages of its own
from a contractual breach (assuming that a contract existed), and
that the JJK entity had had no contractual privity with Smith,
and therefore could not recover for its own "contractual"
damages. As Smith points out in its opposition (Rec. Doc. 446, at
pg. 10), Ciolino's contentions of a joint venture between CPWD
and JJK had their inception in Ciolino's opposition to Smith's
motion for summary judgment (Rec. Doc. 170, at pgs. 8-12).
Although no allegation regarding a joint venture between CPWD and
JJK had previously been made in the lawsuit, Ciolino sought to
avoid summary judgment by arguing primarily that JJK was a third
party beneficiary to the CPWD contract, and alternatively that a
joint venture existed between CPWD and JJK.
11

Based on the jury's answers to the questions on the verdict
form, we now know that a contract existed between CPWD and Smith
and that Smith breached that contract.29

We also know that Smith

was unaware of the existence of the CPWD/JJK joint venture,
pursuant to Question 3a.

Further, Question 3a has no temporal

aspect, but based on the course of this litigation,30 Smith was not
aware

of

the

joint

venture

until

Ciolino

first

raised

the

contention in its opposition to the motion for summary judgment.
Smith attaches great significance to the awareness or knowledge
aspect of the joint venture, and in response Ciolino goes back to
Woodlawn and principles of agency.
The Court is persuaded that Woodlawn does not negate the
significance of the jury's answer to Question 3a.
with

questions

of

procedural

capacity

principal's standing to enforce a contract.

and

Woodlawn dealt
an

undisclosed

The Court agrees with

Ciolino's contention that the issue of knowledge does not ipso
facto affect the undisclosed principal's ability to recover for a
breach.31
29

Unfortunately, the verdict form contained no question to
test the veracity of Ciolino's contention that CPWD was in fact
acting as an agent for the joint venture, as opposed to acting on
its own behalf, when it contracted with Smith.
30

See note 28 supra.

31

Of course in this case the joint venture has never been
made a party to this litigation. But if the joint venture had
attempted to sue in its own name, then Woodlawn stands for the
proposition that the CPWD/JJK joint venture would have had
procedural capacity to sue Smith for breach of contract if CPWD
12

But what knowledge or awareness does affect is foreseeability,
and the question of foreseeability, in the context of a contractual
breach, directly affects the scope of the obligor's liability for
the damages attributable to a breach.

Louisiana law creates a

clear distinction between good faith and bad faith obligors in
breach of contract cases.32

In this case the jury found that Smith

did not breach the contract with CPWD in bad faith (Question 7)
which means that Smith can only be liable for those damages that
were foreseeable at the time that the contract was made.33

Because

Smith was not aware of the joint venture between CPWD and JJK until
Ciolino filed its opposition to the motion for summary judgment,
much less when it contracted with CPWD, the damages that the JJK
entity imputes to the joint venture were not foreseeable to Smith
and are therefore not recoverable.

Ciolino is not entitled to a

new trial on damages.
Ciolino's third argument for a new trial pertains to the
jury's finding that no contract was formed between Smith and the
Ciolino retailers, C's 1 and C's 2.

Ciolino argues that since the

had in fact acted in the capacity as agent for the joint venture.
32

See La. Civ. Code arts. 1996 & 1997. Article 1996,
entitled Obligor in Good Faith, states: "An obligor in good faith
is liable only for the damages that were foreseeable at the time
that the contract was made." (emphasis added). Article 1997,
entitled Obligor in Bad Faith, states: "An obligor in bad faith
is liable for all the damages, foreseeable or not, that are a
direct consequence of his failure to perform."
33

La. Civ. Code art. 1996.
13

jury's finding was contrary to the great weight of the evidence
that Smith formed a contract with these entities, a new trial on
the breach of contract claims of C's 1 and C's 2 is warranted.
After considering the arguments of the parties, the Court declines
to upset the jury's findings on this issue.
The Court is not persuaded that Ciolino is entitled to a new
trial on any of its breach of contract claims. Ciolino's motion is
DENIED.
c.) Motion for Relief from Judgment (Rec. Doc. 461)
In the instant motion, Ciolino moves for relief from the
Court's judgment entered subsequent to trial in this matter.

At

the basis of this motion is Ciolino's argument that Smith failed to
disclose the entirety of Russell Gray's emails and has prejudiced
Ciolino by hiding these emails throughout this litigation.
After trial in this matter, Smith filed its Bill of Costs,34
seeking to recoup a number of alleged costs incurred.

Filed in

conjunction therewith was a document representing an invoice for
copying services of 368 PDF file conversions and 368 hard copies.35
A handwritten note on the invoice indicates that the copies were
"emails of Russell Gray," apparently delivered to Smith's counsel
on a "CD sent from [the] client."36

34

Rec. Doc. 435.

35

Rec. Doc. 441-3, at pg. 17.

36

Id.
14

According to Ciolino, Smith provided 244 pages of email
documents during discovery in response to Ciolino's requests.
Ciolino contends that the 368 pages reflected on the invoice shows
that Smith failed to disclose all of Gray's emails, but rather
selected 244 pages out of the 368 available and produced only
those.

Ciolino contends that these withheld documents "warrant

Rule 60(b) relief on several disjuncts, such as newly discovered
evidence or misconduct by the opposing party."

Ciolino admits it

does not know the contents of the disk, but claims it is entitled
to

inspect

the

disk

and

should

be

given

the

opportunity

to

supplement its post-trial motions with information it may collect
from the disk.
In

opposition,

Smith

argues

that

Ciolino's

motion

fails

because it is based on the illogical presumption that "in every
civil litigation every document a lawyer receives from his client
should be produced."

Smith contends that it never claimed to have

produced all of the documents related to Gray's emails, but rather
expressly produced only those which it identified as relating to
Ciolino.

Smith

contends

that

the

emails

it

identified

as

irrelevant to this litigation and therefore chose not to disclose
were "junk emails, emails between Gray and other customers,37 emails
between Gray and his wife or his family attorney, and emails

37

According to Smith, Gray had eleven customers, nine of
which were unrelated to Ciolino.
15

containing Gray’s expense reports."38
The Court has no reason to discredit the representations of
Smith's counsel that the emails responsive to Ciolino's discovery
requests were provided and that any emails withheld were irrelevant
to this litigation.

Therefore, the Court is not persuaded that

Ciolino is entitled to relief from the Court's judgment under Rule
60.

Ciolino's motion is DENIED.

IV. CONCLUSION
Accordingly, and for the foregoing reasons;
IT IS ORDERED that the Renewed Motion for Judgment as a Matter
of Law and Motion for New Trial (Rec. Doc. 438) filed by Ciolino
Pharmacy Wholesale Distributors, LLC, et al. is DENIED;
IT IS FURTHER ORDERED that the Motion for New Trial (Rec. Doc.
439) filed by Ciolino Pharmacy Wholesale Distributors, LLC, et al.
is DENIED;
IT IS FURTHER ORDERED that the Motion for Relief from Judgment
(Rec. Doc. 461) filed by Ciolino Pharmacy Wholesale Distributors,
LLC, et al. is DENIED.
This 2nd day of July, 2014.

______________________________
Judge Jay C. Zainey
United States District Court

38

Rec. Doc. 464, at pg. 4.
16