TAX MATRIX TECHNOLOGIES, LLC v. WEGMANS FOOD MARKETS, INC.

Filing 140

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE EDUARDO C. ROBRENO ON 04/19/2017. 04/19/2017 ENTERED AND COPIES E-MAILED.(nds)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
TAX MATRIX TECHNOLOGIES, LLC,
Plaintiff,
v.
WEGMANS FOOD MARKETS, INC.,
Defendant.

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CIVIL ACTION
No. 13-6223

M E M O R A N D U M
EDUARDO C. ROBRENO, J.

April 19, 2017

On June 6, 2016, following the conclusion of a six-day
jury trial and the rendering of a jury verdict, the Court
entered judgment in favor of Plaintiff Tax Matrix Technologies,
LLC (“Tax Matrix”) and against Defendant Wegmans Food Markets,
Inc. (“Wegmans”) in the amount of $351,551.86. Tax Matrix now
seeks a new trial on damages, or, in the alternative, to mold
the verdict to apply pre-judgment interest. Wegmans opposes the
motion for a new trial on damages on both procedural and
substantive grounds. Wegmans does not oppose the alternative
motion to mold the verdict to apply interest, but it disputes
the proper amount of that interest. For the reasons that follow,
the Court will deny Tax Matrix’s motion for a new trial on
damages but grant in part and deny in part its motion to mold
the verdict to apply pre-judgment interest.

I.

BACKGROUND
The dispute in this case arose out of a business

relationship between Tax Matrix, a tax consulting firm, and
Wegmans, a regional supermarket chain. Pursuant to a written
contingency fee arrangement (the “Letter Agreement”), Tax Matrix
was to provide certain tax consulting services to Wegmans. The
lawsuit concerned Tax Matrix’s defense of Wegmans during an
audit by the State of Maryland that commenced in October 2011
and closed in July 2013 (the “Maryland audit”). The issue before
the Court was whether the work performed by Tax Matrix in
connection with the Maryland audit fell within the scope of work
contemplated by the Letter Agreement, or whether some other,
unwritten fee arrangement applied.
Tax Matrix brought state law claims against Wegmans
for breach of contract or, in the alternative, unjust
enrichment. Wegmans, in exchange, filed counterclaims against
Tax Matrix for breach of an implied covenant of good faith and
fair dealing, breach of fiduciary duty, and breach of contract.
Both parties moved for summary judgment.
The Court ultimately concluded that the Letter
Agreement was fairly susceptible to different reasonable
interpretations as to whether it governed Tax Matrix’s services
in connection with the Maryland audit, and accordingly, the
Court (1) denied summary judgment to Tax Matrix on Tax Matrix’s
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breach of contract claim; (2) denied summary judgment to Wegmans
on Tax Matrix’s breach of contract claim; and (3) granted
summary judgment in favor of Tax Matrix on all of Wegmans’
counterclaims.
II.

STANDARDS OF REVIEW
A.

Motion for New Trial on Damages

After a jury trial, a court “may, on motion, grant a
new trial on all or some of the issues--and to any party--. . .
for any reason for which a new trial has heretofore been granted
in an action at law in federal court.” Fed. R. Civ. P. 59(a)(1).
In diversity cases in which state law “governs the claims for
relief,” state law also “suppl[ies] the test for federal-court
review of the size of the verdict.” Gasperini v. Ctr. for
Humanities, Inc., 518 U.S. 415, 426 (1996)1; see also BrowningFerris Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S.
1

The Supreme Court granted certiorari in Gasperini
expressly for the purpose of addressing the “important question
regarding the standard a federal court uses to measure the
alleged excessiveness of a jury’s verdict in an action for
damages based on state law.” Gasperini, 518 U.S. at 422. To
answer this question, the Court undertook a full-fledged Erie
analysis, noting that “[f]ederal diversity jurisdiction provides
an alternative forum for the adjudication of state-created
rights, but it does not carry with it generation of rules of
substantive law” and that, in Gasperini, both state and federal
interests could be simultaneously accommodated. Id. at 426; see
also id. at 437 (“[The State]’s dominant interest can be
respected, without disrupting the federal system, once it is
recognized that the federal district court is capable of
performing the checking function, i.e., that court can apply the
State’s . . . standard in line with [State] case law . . . .”).
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257, 279 (1989) (“In reviewing an award of . . . damages, the
role of the district court is to determine whether the jury’s
verdict is within the confines set by state law, and to
determine, by reference to federal standards developed under
Rule 59, whether a new trial or remittitur should be ordered.”).
Under Pennsylvania law, which supplies the applicable
standard for use in making a Rule 59(a) determination in this
case, “[a] trial court may only grant a new trial when the
jury’s verdict is so contrary to the evidence that it ‘shocks
one’s sense of justice.’” Neison v. Hines, 653 A.2d 634, 636
(Pa. 1995) (quoting Kiser v. Schulte, 648 A.2d 1, 4 (Pa.
1994)). A damages award “shocks the conscience” if it “simply
is not reasonable and bears no rational relationship to the
evidence presented at trial.” Davis v. Steigerwalt, 822 A.2d
22, 28 (Pa. Super. Ct. 2003); see also Kiser, 648 A.2d at 4 (“A
jury verdict is set aside . . . when it appears to have been
the product of passion, prejudice, partiality, or corruption,
or where it clearly appears from uncontradicted evidence that
the amount of the verdict bears no reasonable relation to the
loss suffered by the plaintiff.”).
B.

Award of Pre-Judgment Interest

28 U.S.C. § 1961(a) provides, in relevant part, that
“[i]nterest shall be allowed on any money judgment in a civil

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case recovered in a district court. . . . Such interest shall be
calculated from the date of the entry of the judgment, at a rate
equal to the weekly average 1-year constant maturity Treasury
yield, as published by the Board of Governors of the Federal
Reserve System, for the calendar week preceding[] the date of
the judgment.” 28 U.S.C. § 1961(a). “Under Pennsylvania law, the
award of prejudgment interest in a contract action is not
discretionary; it is a legal right to which a prevailing party
is entitled.” ECEM European Chem. Mktg. B.V. v. Purolite Co.,
451 F. App’x 73, 79 (3d Cir. 2011) (citing Fernandez v. Levin,
548 A.2d 1191, 1193 (Pa. 1988)).
III. MOTION FOR NEW TRIAL ON DAMAGES
Tax Matrix moves for a new trial on damages pursuant
to Federal Rule of Civil Procedure 59 on the basis that “(a) the
amount of the verdict was against the weight of the evidence
presented at trial; (b) the amount of the verdict was
substantially less than was unquestionably proven by Plaintiff’s
uncontradicted and undisputed evidence; (c) statements made by
counsel for Defendant in his opening statement were not
supported by evidence submitted at trial; (d) arguments made by
counsel for Defendant in his closing argument on damages were
based on facts not in evidence; and (e) any and all other
bases/reasons . . . .” Mot. New Trial Damages ¶ 4, ECF No. 125.

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In Tax Matrix’s view, the jury had only one reasonable
method by which to calculate damages. Tax Matrix argues that,
because the jury found in the first phase of the trial that “the
Letter Agreement in fact applied to Tax Matrix’s reductive work
on the Maryland Audit, the only remaining question for the jury
in Phase 2 of the trial was: What was the appropriate starting
point for calculating Tax Matrix’s 25% contingency fee?” Mem.
Supporting Mot. New Trial Damages at 3, ECF No. 135. According
to Tax Matrix, “[t]his should have been a simple answer based on
a mechanical application of the Letter Agreement” based on the
following rationale:
Given the undisputed fact that Tax Matrix was engaged
by Wegmans to defend the Maryland Audit from the very
beginning, i.e., before any tax deficiency numbers
were ever issued by the State, the only reasonable (or
even possible) conclusion is that the $4.6 million
deficiency from the First Workpapers is the starting
point, and therefore the proper measure of contract
damages under the Letter Agreement should have been
the full amount of the Invoice for roughly $1.37
million.
Id. at 3-4 (emphasis in original).
Tax Matrix theorizes that, “[r]unning contrary to the
weight of the evidence presented at trial, the jury’s verdict
was no doubt the product of unfair prejudice . . . .” Id. at 11.
Specifically, Tax Matrix argues that Wegmans improperly
introduced a certain exhibit as substantive evidence, despite a
previous ruling by the Court permitting the use of that exhibit

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only for the limited purpose of impeachment. See id. at 11-12.
Tax Matrix also argues that Wegmans “wrongly argued facts not in
evidence” during its summation, including that “the State of
Maryland actually ‘intended’ to issue different (lower) initial
deficiency numbers in the First Workpapers than it actually
did.” Id. at 12.
Tax Matrix concludes that, because the jury arrived at
a result that was not the full amount of the $1.37 million
invoice, “it is clear that the jury’s damage award was plucked
out of thin air.” Id. at 11 (emphasis omitted). Tax Matrix
argues that the jury’s damage award in the amount of $351,551.86
“bears ‘no reasonable relation’ to the uncontroverted facts
proven at trial and has no nexus to the Letter Agreement the
jury was charged with enforcing.” Id. (quoting Kiser, 648 A.2d
at 4); see also id. at 14 (arguing that it “should ‘shock the
conscience’ of the Court” that the jury “apparently plucked a
lesser figure from thin air” than the amount it should have
calculated based on “undisputed evidence that the First
Workpapers reflected a tax deficiency of $4.6 million and Tax
Matrix was specifically instructed to and did reduce that
figure.” (emphasis omitted)).

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After attacking Tax Matrix’s motion on procedural
grounds,2 Wegmans responds that Tax Matrix’s argument fails on
the merits because Tax Matrix’s “post-trial contention that ‘the
2

Wegmans opens its response brief by arguing that the
Court cannot grant the relief Tax Matrix requests because “Tax
Matrix waived any post-trial attack on the sufficiency of the
evidence by failing to move for a directed verdict at the close
of proof.” Resp. Opp. Mot. New Trial Damages at 1, ECF No. 136
[hereinafter, Resp.]. Wegmans cites Yohannon v. Keene Corp., 924
F.2d 1255, 1262 (3d Cir. 1991), to support its assertion that
“[i]t has long been the rule in this Circuit that, to mount a
post-trial attack on the sufficiency of the evidence under Rule
50 or Rule 59 (as Tax Matrix does here), the aggrieved party
must first move for a directed verdict at the close of all of
the evidence.” Resp. at 2. Wegmans argues that “[t]here is no
question that Tax Matrix did not move for [a] directed verdict
on damages at the close of proof,” and therefore that “Tax
Matrix cannot now take the ‘extreme position that the state of
the record entitle[d] [it] to judgment, i.e., that evidence the
jury was not at liberty to reject dictated a judgment in [its]
favor.’” Id. at 3-4 (quoting Greenleaf v. Garlock, Inc., 174
F.3d 352, 365 (3d Cir. 1999)).
Tax Matrix replies that Greenleaf actually supports
its motion, because the Third Circuit in Greenleaf “permitted a
Rule 59 motion in absence of a prior Rule 50 motion, and
explained the difference between a defendant arguing the
sufficiency of the evidence, on one hand, and a plaintiff
arguing that the jury’s verdict[] was against weight of the
evidence, on the other.” Reply Mem. at 1, ECF No. 137-2.
In its surreply, Wegmans acknowledges that “a weight
of the evidence argument is not waived by the failure to timely
file a Rule 50 motion,” but argues that Tax Matrix has mounted
“a sufficiency of the evidence challenge, not a weight of the
evidence challenge.” Surreply Mem. at 1-2, ECF No. 138-1.
The Court need not decide whether Tax Matrix’s
argument is based on the weight versus the sufficiency of the
evidence, because, even assuming that Tax Matrix did not waive
its right to request a new trial on damages, the Court finds,
for the reasons detailed in this memorandum, that Tax Matrix’s
argument for a new trial on damages has no merit.
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only logical starting point’ for calculating the contingency fee
is the first number received from Maryland” is “inconsistent”
with the testimony of a certain witness for Tax Matrix, Stephen
Feathers,3 who “testified that his company was entitled to a
contingency fee under the Letter Agreement only for reductions
that it achieved through its own efforts, and not from the
efforts of someone else.” Resp. Opp. Mot. New Trial Damages at
5-6, ECF No. 136 [hereinafter, Resp.] (quoting Mem. Supporting
Mot. New Trial Damages at 4). In Wegmans’ view, “that first
number received is irrelevant” for purposes of calculating the
contingency fee because, “according to Mr. Feathers, Tax
Matrix’s burden was to show what reductions it was responsible
for, not merely point to the first number and perform ‘a
mechanical application of the Letter Agreement.’” Id. at 6
(quoting Mem. Supporting Mot. New Trial Damages at 3). In other
words, Wegmans believes that “Tax Matrix simply failed to meet
its burden that it was responsible for all of the reductions
claimed.” Id.
In addition to Mr. Feathers’ testimony, Wegmans cites
the testimony of another witness, Melissa Myers, the Tax Matrix
employee who worked on the Maryland audit and “concede[d] that
the reduction achieved by applying the error factor and

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Mr. Feathers was the individual who negotiated and
signed the Letter Agreement on behalf of Tax Matrix.
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correcting the arithmetical error was not her doing, but that of
Maryland’s auditors.” Id. at 7. Wegmans contends that “[t]his
admission, when coupled with Mr. Feathers’ explanation of what
was and what was not compensable under the Letter Agreement, was
ample evidence for the [j]ury to conclude that Tax Matrix was
not entitled to a contingency fee based on a reduction from the
initial $4.6 million attributable to Maryland’s correction of
its own errors.” Id. at 8.4 In light of the Feathers and Myers
testimony, Wegmans concludes that the jury’s award was
“rationally based on the testimony of Tax Matrix’s own
witnesses, and the limited documentary evidence Tax Matrix
presented at trial, and thus should be upheld.” Id. at 10.
With regard to Tax Matrix’s argument concerning
Exhibit D-7, Wegmans responds that it referred to this exhibit
not during the damages phase of the trial, but instead during
the liability phase--and “Tax Matrix’s speculation that a
reference to this exhibit in Phase 1 had an impact on the
damages awarded in Phase 2 is no grounds for a new trial.” Id.
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Wegmans adds that “the decision to argue only for the
full value of the invoice, and not give the [j]ury the means to
calculate any lesser amount, was a tactical one made by Tax
Matrix in order to force the [j]ury to award the full sum of the
invoice.” Id.; see also id. (“Once the [j]ury concluded . . .
that a full value award was not appropriate in light of the
Feathers and Myers testimony, Tax Matrix gave it no assistance
in closing arguments (or anywhere else) on how to calculate what
amount would properly compensate Tax Matrix for the work it
actually performed on the Maryland audit.”). The Court agrees
that Tax Matrix made this decision for tactical purposes.
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at 12.5 Wegmans also argues in a footnote that Tax Matrix’s
argument regarding “wrongly argued facts not in evidence”
“distorts the record.” Id. at 12 n.5. Rather than “claim[ing] to
have substantive evidence of the auditor’s intent,” as Tax
Matrix’s motion seems to suggest, Wegmans claims that it merely
“suggested an inference from the evidence in the record--the
workpapers themselves--that the [j]ury was free to accept or
reject.” Id.
In its surreply brief, Wegmans summarizes its argument
as follows:
As the [j]ury heard during the course of the trial,
the largest reductions from the initial $4.6MM
deficiency figure were the result of the Maryland
auditors’
self-correction
of
their
arithmetical
mistakes. According to Ms. Myers, her advocacy was not
what caused these reductions, and according to Mr.
Feathers, Tax Matrix was not entitled to recover a
contingency fee for reductions it did not cause.
Although Tax Matrix continues to argue in post-trial
that its ‘advocacy was indeed the catalyst in
obtaining these intermediate reductions in [Wegmans]
tax liability,’ this is mere surmise, for Tax Matrix
[chose] not to call the Maryland auditors and elicit
proof as to what spurred these corrections. Given Ms.
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Wegmans also points out that Tax Matrix did not object
to Wegmans’ publishing Exhibit D-7 to the jury, or to
referencing that exhibit during closing. Id. at 11.
Consequently, Wegmans argues, “[Tax Matrix] has waived the right
to argue any prejudice now.” Id. (citing Waldorf v. Shuta, 142
F.3d 601, 629 (3d Cir. 1998) (“[A] party who fails to object to
errors at trial waives the right to complain about them
following trial.”); Patel v. Patel, No. 14-2949, 2016 U.S. Dist.
LEXIS 68446, at *24-25 (E.D. Pa. May 25, 2016) (“Defendant’s
failure to object precludes him from seeking a new trial on the
grounds of the impropriety of opposing counsel’s crossexamination or closing remarks.”)).
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Myers’ testimony that she did not identify the
arithmetic errors, and accordingly, did not ask that
they be corrected, the [j]ury was free to conclude
that Tax Matrix was not in fact the ‘catalyst’ for
these reductions. There is certainly nothing shocking
about that conclusion, nor is it legitimate to say
that Tax Matrix has ‘unquestionably proven’ by
‘uncontradicted and undisputed evidence’ that it was
responsible for the initial, arithmetical reductions.
Surreply Mem. at 3, ECF No. 138-1 (citations omitted).
The Court finds this argument persuasive and will deny
Tax Matrix’s motion for a new trial on damages. The Court does
not agree with Tax Matrix that the jury’s calculation “bears ‘no
reasonable relation’ to the uncontroverted facts proven at
trial.” Mem. Supporting Mot. New Trial Damages at 11 (quoting
Kiser, 648 A.2d at 4). The Court finds instead that the damages
award was not “contrary to the evidence,” let alone to the
degree that it “‘shocks one’s sense of justice,’” Neison, 653
A.2d at 636 (quoting Kiser, 648 A.2d at 4), because the jury
reasonably could have determined, based on the testimony
presented at trial, that (1) Tax Matrix did not cause each and
every reduction, and (2) Tax Matrix was not entitled to recover
a contingency fee for reductions that it did not cause.

IV.

MOTION TO MOLD VERDICT TO APPLY PRE-JUDGMENT INTEREST
In the alternative to its motion for a new trial on

damages, Tax Matrix seeks to have the Court mold the verdict to
apply pre-judgment interest. Tax Matrix argues that “since the
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Letter Agreement obligated Wegmans to pay the Invoice within ten
days of receipt and the Invoice was received by Wegmans on
August 5, 2013, prejudgment interest at 6% per annum should be
awarded from August 16, 2013.” Mem. Supporting Mot. New Trial
Damages at 14. As of the date of Tax Matrix’s filing, this
amount was “$60,326.30, and the per diem rate is $57.79.” Mot.
New Trial Damages ¶ 5.
Wegmans “does not dispute that Tax Matrix is entitled
to pre-judgment interest under Pennsylvania law, and postjudgment interest at the federal rate.” Resp. Opp. Mot. New
Trial Damages at 13. Wegmans argues, however, that “Tax Matrix’s
request to mold the judgment to include interest asks for too
much.” Id. Wegmans bases its argument on “a distinction between
pre- and post-judgment interest that has escaped Tax Matrix.”
Id. (citing Fishman Org., Inc. v. Frick Transfer, Inc., No. 114598, 2014 WL 3818351, at *1 (E.D. Pa. Aug. 4, 2014) (“Plaintiff
incorrectly argues . . . that interest should apply from the
June 2007 date until the date the judgment is satisfied,
ignoring the distinction between pre-judgment and post-judgment
interest[.] [Plaintiff] is entitled to the 6% prejudgment
interest rate . . . only up to the . . . date of the entry of
the final judgment.”)). Given this distinction, Wegmans believes
that “Tax Matrix is entitled to a 6% interest rate from the date

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payment was due (August 16, 2013) until judgment was entered
(June 7, 2016), and no further.” Id.
The parties agree not only that Tax Matrix is entitled
to interest, but they also agree on a per diem rate of $57.79
and a start date of August 16, 2013 for application of that
rate. The Court will therefore grant Tax Matrix’s motion to mold
the verdict. The application of this rate will be limited,
however, to the date that judgment was entered.6
V.

CONCLUSION
For the foregoing reasons, the Court will deny Tax

Matrix’s motion for a new trial on damages but grant in part and
deny in part its motion to mold the verdict to apply prejudgment interest. Under Pennsylvania law, Tax Matrix is
entitled to a 6% interest rate from the date on which payment
was due (i.e., August 16, 2013) until the date on which judgment
was entered (i.e., June 7, 2016). This amounts to $57.79 per
diem, for a total of $59,292.54.

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The Court notes that, although Tax Matrix initially
requested application of the $57.79 per diem rate “going
forward,” Mot. New Trial Damages at 2, it has not challenged
Wegmans’ contention regarding the distinction between pre- and
post-judgment interest that limits application of the per diem
rate to the date on which judgment was entered.
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