Bayer Cropscience LP v. Albemarle Corporation

Filing 165

ORDER granting 147 Motion for Attorney Fees; denying 149 Motion for Judgment as a Matter of Law; denying 151 Motion to Alter Judgment. Albemarle's renewed motion for judgment as a matter of law and in the alternative for a new trial [DE 149] is DENIED; Bayer's motion for attorney fees under Fed. R. Civ. P. 54(d) [DE 147] is GRANTED and attorney fees in the amount of $708,383.00 are awarded to Bayer; and Bayer's motion to alter or amend judgment [DE 151] is DENIED. Signed by US District Judge Terrence W. Boyle on 7/25/2018. (Stouch, L.)

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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No. 5:14-CV-412-BO

BAYER CROPSCIENCE LP
Plaintiff,

v.
ALBEMARLE CORPORATION
Defendant.

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ORDER

This cause comes before the Court on several post-judgment motions. The appropriate
responses and replies have been filed and the matters are ripe for ruling.
BACKGROUND
The Court dispenses with a full recitation of the procedural and factual background of this
matter, and incorporates by reference its discussion found in its order entered April 14, 2016. [DE
81]. Following remand from the Court of appeals, the matter proceeded to jury trial at Elizabeth
City, North Carolina on March 26, 2018. On March 28, 2018, the jury returned a verdict finding
by a preponderance of the _evidence that Albemarle acted in bad faith when raising the price of
methyl bromide to $8.49 beginning July 1, 2014, and that Albemarle acted in bad faith when
raising the price of methyl bromide to $11.04 beginning April I, 2015. [DE 140]. The jury further
found that Albemarle's bad faith conduct damaged Bayer in the amount of $17,628,323.00. Id
Judgment was thereafter entered in favor of Bayer and the case was closed.
Bayer has filed a motion for attorney fees and a motion to alter or amend the judgment to
include pre-and-post-judgment interest. Albemarle has filed a renewed motion under Fed. R. Civ.
P. 50 for judgment as a matter oflaw, or in the alternative for a new trial. Fed. R. Civ. P. 59.

DISCUSSION

I.

Albemarle' s motion for judgment as a matter of law and for new trial
Rule 50(b) of the Federal Rules of Civil Procedure provides that where, as here, a party

makes a renewed motion for judgment as a matter of law under after the denial of such a motion
during trial, a court may (1) allow judgment on the verdict; (2) order a new trial; or (3) direct the
entry of judgment as a matter of law. Fed. R. Civ. P. 50(b). A court may grant a motion for
judgment as a matter of law if it finds that a reasonable jury would not have a legally sufficient
evidentiary basis to find for the non-moving party. Fed. R. Civ. P. 50(a)(l). "[W]hen a jury has
returned its verdict, a court may grant judgment as a matter of law only if, viewing the evidence
in a light most favorable to the non-moving party and drawing every legitimate inference in that
party's favor, the court determines that the only conclusion a reasonable jury could have reached
is one in favor of the moving party." Saunders v. Branch Banking And Tr. Co. Of VA, 526 F.3d
142, 147 (4th Cir. 2008) (emphasis added). A court is not permitted to weigh the evidence or
evaluate the credibility of the witnesses when deciding a Rule 50(b) motion. Bresler v. Wilmington
Tr. Co., 855 F.3d 178, 196 (4th Cir. 2017).
"At its core, Bayer's complaint alleges that Albemarle used its contractual leverage-under
the open-price provision-to artificially inflate the price of methyl bromide in violation of the
good faith and fair dealing requirements of the UCC." Bayer Cropscience LP v. Albemarle Corp.,
696 F. App'x 617, 620 (4th Cir. 2017). As the court of appeals has held in this case, whether or
not Albemarle' s conduct in question was commercially unreasonable is a fact-specific inquiry. Id
at 621. In support of Bayer's claim that it was commercially unreasonable to raise the price from
$4.09 per pound to $8.49 per pound in July 2014 and then from -$8.49 per pound to $11.04 per
pound in April 2015, Bayer offered the testimony ofits purchasing manager Hemant Kandlur, who

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testified that he had never seen such a dramatic price increase while working the last twenty-three
years for Bayer, especially when, as was the case here, the price of the raw ingredient was stable
or declining. [DE 162] Trial Tr. 27 March 2018 at 68-69. Mr. Kandlur testified that while
Albemarle was charging $11.04 per pound for methyl bromide, Chemtura was charging Bayer
$2.49 per pound, for the same product from the same place. Id at 72.
Albemarle's witness Mr. Ware testified that he always had a very good reason for raising
the price charged to Bayer, and that the $8.49 price increase was based on his value-in-use model
prepared as part of a "fresh look at the product" Id at 133; 136. Ware testified that the $8.49
price increase also reflected his concern about Bayer's honoring its commitment to purchase 80%
ofits methyl bromide needs from Albemarle. Id at 143. Mr. Ware testified that he started working
on his value-in-use analysis in February 2014, and worked on it through May, June, and July, but
he could not explain why the computer file he used indicated that it was created in July 2014. Id
at 204. Absent other evidence to support the price increase to $8.49 just months after the increase
to $4.09 per pound, a reasonable jury could conclude that Mr. Ware's justification was pretext for
a commercially unreasonable act. The same analysis may be applied to the $11.04 price increase,
which Mr. Ware testified was based on a workers' strike in Israel, but he conceded that the price
of methyl bromide to Albemarle had not gone up when it increased the price to Bayer. Id. at 148;
201. Albemarle's argument that its value-in-use pricing model was necessarily commercially
reasonable because it was based on calculations is unpersuasive. This Court and the court of
appeals have held that the $4.09 price increase was reasonable as it was based on Mr. Ware's
value-in-use analysis and reflected a pass through of Chemtura's increased tolling fee. That the
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subsequent price increases were based on the same or similar multiple of 2.21 does not require a
finding that they were reasonable.

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Also in evidence are internal Albemarle emails, which appear to reflect Albemarle's
position that Bayer's cancellation of its contract with Albemarle was "awesome" and "excellent,"
and that because methyl bromide sales would not continue for much longer, Albemarle would treat
it like a cash out business and get everything it could out of it as soon as possible. [DE 161] Trial
Tr. 26 March 2018 at 130. Viewing the facts in the light most favorable to Bayer, and disregarding
all evidence in Albemarle's favor that the jury is not required to believe - meaning that it is
uncontradicted and unimpeached, Reeves v. Sanderson Plumbing Prod., Inc., 530 U.S. 133, 151
(2000) - the Court finds that there was sufficient evidence for the jury to conclude that Albemarle
acted in a commercially unreasonable manner when it adopted its $8.49 and $11.04 price increases.
Albemarle's additional arguments in support of its challenge to the jury's verdict are
without merit. As to mitigation, the jury heard testimony and argument about Bayer's alleged
failure to mitigate its damages by agreeing to lock in a price with Albemarle in exchange for
agreeing to purchase 100% of its methyl bromide from Albemarle. See, e.g., [DE 163] Trial Tr.
28 March 2018 at 35. Albemarle has not demonstrated that the Court's failure to instruct the jury
on mitigation was error, as it has failed to show that such failure seriously impaired its ability to
make its case. See Noel v. Artson, 641 F.3d 580, 586 (4th Cir. 2011) (failure to give a requested
instruction is error if the requested instruction was (1) correct, (2) not substantially covered by the
charge given, and (3) dealt with some point so important that the failure to give the instruction
seriously impaired the moving party's ability to make its case) (citation omitted). Here, the Court
left Albemarle "ample room to argue its case," and Albemarle has not met its heavy burden to
show that the Court erred in failing to instruct the jury on mitigation. Id. at 587.
As Bayer has correctly argued, the parties to this matter stipulated that they were the proper
parties, correctly designated, and that there was no question of mis-or-non-joinder of parties. See

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[DE 113]. Albemarle cannot now argue that Bayer was not the proper party-plaintiff to be awarded
damages in this action. Finally, Albemarle argues that the remaining jury instructions and the
verdi_ct form were erroneous for the same reasons that it has argued that it is entitled to judgment
as a matter of law. Albemarle contends that the instructions placed an undue emphasis on the
amount of the price increases rather than the manner in which they were increased, and failed to
pay adequate attention to the express contract between the parties. Considering the instructions
given to the jury as a whole, see United States v. Lighty, 616 F.3d 321, 366 (4th Cir. 2010) (citation
omitted), the Court finds that the instructions given provided accurate statements of the law and
that Albemarle was "permitted more than enough room to argue the facts in light of that standard."
Noel, 641 F.3d at 587. For these reasons, Albemarle's motion for judgment as a matter oflaw is
denied.
A motion for new trial should be granted where "(1) the verdict is against the clear weight
of the evidence, or (2) is based upon evidence which is false, or (3) will result in a miscarriage of
justice, even though there may be substantial evidence which would prevent the direction of a
verdict." Atlas Food Sys. & Servs., Inc. v. Crane Nat'! Vendors, Inc., 99 F.3d 587, 594 (4th
Cir.1996); see also Cline v. Wal-Mart Stores, Inc., 144 F.3d 294, 301 (4th Cir. 1998). A court is
permitted to weigh the evidence and consider the credibility of the witnesses when deciding a
motion for new trial. Cline, 144 F.3d at 301.
Albemarle argues that the same reasons that support its Rule 50(b) motion support its
motion for new trial. Albemarle further argues that it would be a miscarriage of justice to allow
Bayer to recover for a breach of the same contract with Albemarle that Bayer breached, the
evidence of which came to light only through discovery. However, as Bayer has argued in
opposition, the court of appeals has rejected Albemarle's argument that Virginia's first material

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breach doctrine would prevent Bayer from recovering in this case. Albemarle's Rule 59 motion
for new trial is denied.
IL

Bayer's motion for attorney fees
Bayer has moved under Federal Rule of Civil Procedure 54(d)(2) for an award of attorney

fees in the amount of $708,383.00. Albemarle contests that Bayer is entitled to attorney fees on
two grounds, but does not contest the amount requested. First, Albemarle contends that Bayer's
claim for attorney fees should have been submitted to a jury. Rule 54(d)(2)(A) provides that a
claim for attorney fees and related nontaxable expenses

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be made by a motion unless the

applicable substantive law requires attorney fees to be proven at trial as an element of damages.
Fed. R. Civ. P. 54(d)(2)(A). The contract at issue in this case provided that Albemarle agreed to
indemnify Bayer from "any and all claims, damages, liabilities and expenses, including reasonable
attorney's fees and amounts paid in settlement of any such claims, arising out of ... any breach of
the representations, warranties, covenants and agreements of Albemarle contain in this Agreement
" [DE 53-4 at 3].
"[W]hen a contract provides for an award of attorneys fees or legal costs, not as costs to
the prevailing party, but as an element of damages, th'e grant or denial of such an award is a
substantive issue .... " Carolina Power & Light Co. v. Dynegy Mktg. & Trade, 415 F.3d 354, 362
(4th Cir. 2005), abrogated on other grounds by Ray Haluch Gravel Co. v. Cent. Pension Fund of
Int'/ Union of Operating Engineers & Participating Employers, 571U.S.177 (2014). A proper

reading of the contract term here, however, designates attorney fees as an expense, not as an
element of damages. See Newberry Station Homeowners Ass 'n, Inc. v. Bd. of Sup 'rs of Fairfax

Cty., 285 Va. 604, 615 (2013) ("referential and qualifying words and phrases, where no contrary
intention appears, refer solely to the last antecedent. The last antecedent is 'the last word, phrase,

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or clause that can be made an antecedent without impairing the meaning of the sentence."' (internal
alteration and citation omitted). Moreover, "contractual provisions that are ambiguous or hybrid
also fit within Rule 54(d)(2)(A) of the Federal Rules of Civil Procedure because they do not clearly
provide for the recovery of the fees as an element of damages so that the attorneys' fees claim
should be made by motion." Carolina Power & Light Co., 415 F.3d 354, 363 n.1 (Wilkinson, J.
concurring). Thus, to the extent that attorney fees are included as both damages and expenses,
they are not a substantive issue which must be decided by a jury.
Second Albemarle contends that Bayer is not entitled to attorney fees because Albemarle
did not breach the contract at issue in this case. The contract provision expressly provides that
attorney fees may be recovered for breach of the representations, warranties, and covenants
contained in the agreement. The agreement at issue is governed by Virginia's enactment of Article
2 of the Uniform Commercial Code (UCC). Va. Code§ 8.2-101 et seq. Where, as here, there is
an open price term or the parties have not agreed on a price, a price to be fixed by the seller or the
buyer "means a price for him to fix in good faith." Va. Code § 8.2-305. Further, every contract
governed by Virginia law "contains an implied covenant of good faith and fair dealing in the
performance of the agreement." Pennsylvania Life Ins. Co. v. Bumbrey, 665 F. Supp. 1190, 1195
(E.D. Va. 1987). The implied covenant of good faith, as implied both by Virginia law and the
UCC, was found by the jury to have been breached by Albemarle, and Bayer is entitled to attorney
fees under the terms of the agreement.
The Court has further considered the amount requested by Bayer and finds it to be
reasonable. See Grissom v. Mills Corp., 549 F.3d 313, 320-21 (4th Cir. 2008) (court begins with
lodestar amount and considers factors including time and labor expended, customary fee for like
work, skill required to perform legal services); see also Hensley v. Eckerhart, 461 U.S. 424, 434-

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35 (1983). The length of this litigation, including an appeal to the court of appeals and a jury trial,
support the reasonableness of the number of hours for which Bayer seeks reimbursement. The
hourly rates charged are further reasonable and in accordance with rates charges by comparable
practitioners. See [DE 147-2] Kenyon Deel. The Court has been presented with no basis which
would support a reduction in the requested fee. Accordingly, Bayer's motion for attorney fees is
granted and attorney fees are awarded to Bayer in the amount of$708,383.00.
III. Bayer's motion to alter or amend judgment
Bayer seeks to alter or amend the judgment under Fed. R. Civ. P. 59(e) to include
$3,141,542.44 in prejudgment interest and post-judgment interest at 2.06% under federal law. As
Albemarle correctly argues, post-judgment interest at the legal rate is awarded as a matter oflaw,
and is therefore applicable whether or not it is included in the judgment. 28 U .S.C. § 1961; White

v. Bloomberg, 360 F. Supp. 58, 63 (D. Md. 1973), aff'd, 501 F.2d 1379 (4th Cir. 1974); see also
In re Redondo Const. Corp., 700 F.3d 39, 42 (1st Cir. 2012). Accordingly, the Court need not
direct the clerk to amend the judgment to include post-judgment interest in order for it to be
applied.
Bayer is not entitled to an award of prejudgment interest from the Court.
With regard to such an award, the Virginia Code provides in pertinent part that "[i]n
any action at law or suit in equity, the verdict of the jury, or if no jury the judgment
or decree of the court, may provide for interest on any principal sum awarded, or
any part thereof, and fix the period at which the interest shall commence." Va.Code
Ann. § 8:01-382 (Michie 1992).

Hitachi Credit Am. Corp. v. Signet Bank, 166 F.3d 614, 633 (4th Cir. 1999). The award of prejudgment interest under Virginia law is a matter of discretion. Virginia Elec. & Power Co. v.

NorfolkS. Ry. Co., 278 Va. 444, 471 (2009). The discretion whether to award prejudgment interest
lies with the trier of fact. Upper Occoquan Sewage Auth. v. Blake Const. Co. Incorporated/Poole

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& Kent, 275 Va. 41, 63 (2008); see also McClung v. Smith, 89 F.3d 829 (4th Cir. 1996) ("The

Virginia Code allows a jury or a court sitting without a jury to award prejudgment interest in an
action at law or a suit in equity"); Dairyland Ins. Co. v. Douthat, 248 Va. 627, 63 l (1994) ("This
section provides for the discretionary award of prejudgment interest by the trier of fact, who "may
provide for" such interest and fix the time of its commencement") (emphasis removed); J. W.
Creech, Inc. v. Norfolk Air Conditioning Corp., 237 Va. 320, 326 (1989); Ragsdale v. Ragsdale,

30 Va. App. 283, 292, 516 S.E.2d 698, 702 (1999) ("The award of prejudgment interest is
discretionary, a matter committed to the trier of fact"). The discretion lies with the trier of fact
because prejudgment interest, unlike post-judgment interest, is a part of actual damages. See
Devine v. Buki, 289 Va. 2, 179 (2015); Pulliam v. Coastal Emergency Servs. of Richmond, Inc.,

257 Va. 1, 25 (1999). Because Bayer failed to present the issue of prejudgment interest to the jury,
its "argument that the district court ha[s] discretion to award prejudgment interest in this instance
fails as matter oflaw." 3D Glob. Sols., Inc. v. MVM, Inc., 754 F.3d 1053, 1055 (D.C. Cir. 2014).
Bayer's motion to alter or amend judgment is therefore denied.
CONCLUSION
Accordingly, for the foregoing· reasons, Albemarle's renewed motion for judgment as a
matter of law and in the alternative for a new trial [DE 149] is DENIED; Bayer's motion for
attorney fees under Fed. R. Civ. P. 54(d) [DE 147] is GRANTED and attorney fees in the amount
of$708,383.00 are awarded to Bayer; and Bayer's motion to alter or amend judgment [DE 151] is
DENIED.

SO ORDERED, thisd<day ofJuly, 2018.

~EL,/,l(l~
UNITED STATES DISTRICT JUDGE
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