Ultraflo Corporation v. Pelican Tank Parts, Inc. et al

Filing 297

OPINION AND ORDER denying 294 Motion for New Trial.(Signed by Judge Melinda Harmon) Parties notified.(rhawkins, 4)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
ULTRAFLO CORPORATION,

§
§
Plaintiff,
§
§
VS.
§
§
PELICAN TANK PARTS, INC.,
§
PELICAN WORLDWIDE INCORPORATED, §
and THOMAS JOSEPH MUELLER,
§
§
Defendants.
§

CIVIL ACTION H-09-0782

OPINION AND ORDER
The above referenced action, asserting misappropriation of
trade secrets, civil conspiracy, and copyright infringement, was
tried to a jury from January 14-28, 2014 and was closed on March
28, 2014 by a final judgment (instrument #293) that both parties
take nothing since neither side prevailed.
Court

is

Plaintiff

Ultraflo

Corporation’s

Pending before the
renewed

motion

for

judgment as a matter of law under Federal Rule of Civil Procedure
50(b) or, alternatively, motion for new trial under Federal Rule of
Civil Procedure 59 (instrument #294).
Standards of Review
After a party has been fully heard in a jury trial, at the
close of evidence but before the case is submitted to the jury
Federal Rule of Civil Procedure 50(a) permits a court to grant a
motion for judgment as a matter of law if it “finds that a

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reasonable jury would not have a legally sufficient evidentiary
basis to find for the party on that issue . . . .”
50(a)(1).

Fed. R. Civ. P.

Kevin M. Ehringer Enterprises, Inc. v. McData Services

Corp., 646 F.3d 321, 324 (5th Cir. 2011), citing Travelers Cas. &
Sur. Co. of Am. v. Ernst & Young, LLP, 542 F.3d 475, 481 (5th Cir.
2008), and Foradori v. Harris, 523 G.3f 477, 485 (5th Cir. 2008).
“The district court properly grants a motion for judgment as a
matter of law only if the facts and inferences point so strongly in
favor of one party that reasonable minds could not disagree.”
Piotrowski v. City of Houston, 237 F.3d 567, 576 n.9 (5th Cir.
3001). The court considers all the evidence, not merely that which
supports the nonmovant’s case, “but in the light and with all
reasonable inferences most favorable to the party opposed to the
motion.’”

Gomez v. St. Jude Medical Daig Div., Inc., 442 F.3d 919,

927 (5th Cir. 2006), citing Info. Communication Corp. v. Unisys
Corp., 181 F.3d 629, 633 (5th Cir. 1999).

In deciding such a

motion, the court “‘may not make credibility determinations or
weigh the evidence.’”

Kevin M. Ehringer, 646 F.3d at 325, quoting

Reeves v. Sanderson Plumbing Prods., 530 U.S. 133, 150 (2000).
Federal Rule of Civil Procedure 50(b) allows a court to review
its earlier denial of such a motion as a matter of law if the
movant again raises the motion after a jury verdict.

Kevin M.

Ehringer, 646 F.3d at 324-25, citing Downey v. Strain, 510 F.3d
534, 543 (5th Cir. 2007).

A motion for judgment as a matter of law
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after a jury verdict has been returned “‘is a challenge to the
legal sufficiency of the evidence supporting the jury’s verdict.’”
Heck v. Triche,
(5th Cir.

F.3d

, No. 14-30146, 2014 WL 7335023, at *5

Dec. 23, 2014), quoting Hiltgen v. Sumrall, 47 F.3d 695,

699 (5th Cir. 1995).

The Fifth Circuit’s “standard of review with

respect to a jury verdict is especially deferential.”
Bryan County, OK., 219 F.3d 450,

456 (5th Cir. 2000).

Brown v.
“‘A jury

verdict must be upheld unless there is no legally sufficient basis
for a reasonable jury to find as the jury did.’”

Heck, 2014 WL

7335,023, at *5, quoting Foradori v. Harris, 523 F.3d 477, 485 (5th
Cir. 2008).

The court must draw all reasonable inferences and

resolve all credibility determinations in the light most favorable
to the nonmovant.

Id., citing Flowers v. S. Reg’l Physician

Servs., Inc., 247 F.3d 229, 235 (5th Cir. 2001).

Because a Rule

50(b) motion “is technically only a renewal of the [Rule 50(a)
motion for judgment as a matter of law, a/k/a a motion for a
directed verdict] . . . it cannot assert a ground that was not
included in the [original] motion for directed verdict.”

Mozingo

v. Correct Mfg. Corp., 752 F.2d 168, 173 (5th Cir. 1985), quoted for
that proposition, In re Isbell Records, Inc.,

F.3d

, Nos.

13-40878 and 14-40545, 2014 WL 72108778, at *5 (5th Cir. Dec. 18,
2014), citing Arsement v. Spinnaker Exploration Co., 400 F.3d 238,
247 (5th Cir. 2005)(“If a party fails to raise an issue in its Rule
50(a)(1) motion at trial, it may not do so in its post-trial Rule
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50(b) motion.”), and 9B Charles Alan Wright & Arthur K. Miller,
Federal Practice and Procedure § 2537 (3d ed.)(“[T]he district
court only can grant the Rule 50(b) motion on the grounds advanced
in the preverdict motion, because the former is conceived of as
only a renewal of the latter.”).
In relevant part, Rule 59 (“New Trial; Altering or Amending a
Judgment”), provides,
(a) In General.
(1) Grounds for New Trial.
The court may, on
motion, grant a new trial on all or some of the
issues--and to any party--as follows:
(A) after a jury trial, for any reason for
which a new trial has heretofore been granted
in an action at law in federal court . . . .
. . . .
(e) Motion to Alter or Amend a Judgment. A motion to
alter or amend a judgment must be filed no later than 10
days after the entry of judgment.
Federal Rule of Civil Procedure 59(a)(1)(A) gives the district
court the sound discretion whether to grant a new trial after a
jury trial “for any reason for which a new trial has heretofore
been granted in an action at law in federal court.”
court
the

The district

“should not grant a new trial on evidentiary grounds unless

verdict

is

against

the

great

weight

of

the

evidence.”

Whitehead v. Food Max of Miss., Inc., 163 F.3d 265, 269 (5th Cir.
1998), quoted in Carr v. Wal-Mart Stores, Inc., 312 F.3d 667, 670
(5th Cir. 2002). Rule 59 permits a court in its discretion to grant
a new trial “based on its appraisal of the fairness of the trial
and the reliability of the jury’s verdict . . . if the court finds
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that the trial was unfair or marred by prejudicial error.”

Grace

v. Board of Trustees for State Colleges and Universities, 8 F.3d 25
(not designated for publication), No. 92-9528, 1993 WL 456407, at
*7 (5th Cir. Oct. 29, 1993)(citing Smith v. Transworld Drilling Co.,
773 F.2d 610, 613 (5th Cir. 1985)(“A new trial may be granted, for
example, if the district court finds the 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.”)(and cases cited therein)), cert. denied, 510 U.S. 1195
(1994).

“If the trial judge is not satisfied with the verdict of

a jury, he has the right--and indeed the duty--to set the verdict
aside and order a new trial.”
613.

Smith v. Transworld, 773 F.2d at

The court may grant a new trial under Rule 59 “‘where it is

necessary to prevent an injustice.’”
F.3d

In re Isbell Records, Inc.,

, Nos. 13-40878 and 14-40545, 2014 WL 7210778, at *10

(5th Cir. Dec. 18, 2014).

The Fifth Circuit’s standard of review

of a jury verdict is “‘especially deferential.’”

Heck v. Triche,

2014 WL 7335023, at *5, quoting Flowers v. S. Reg’l Servs., Inc.,
247 F.3d 229, 235 (5th Cir. 2001).
A Rule 59(e) motion “calls into question the correctness of a
judgment.”

Templet v. HydroChem Inc., 367 F.3d 473, 478 (5th Cir.

2004).

It “‘serve[s] the narrow purpose of allowing a party to

correct

manifest

errors

discovered evidence.’”

of

law

or

fact

or

to

present

newly

Truvia v. Connick, 577 Fed. Appx. 317, 327
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(5th Cir. Aug. 8, 2014), quoting Waltman v, Int’l Paper Co., 875
F.2d 468, 473 (5th Cir. 1989).1

In 11 Federal Practice and

Procedure § 2810.1, at pp. 124-27 (West 2d ed. 1995), Wright and
Miller identify four grounds upon which a Rule 59(e) motion may be
granted:
the

(1) to correct manifest errors of law of fact upon which

judgment

is

based;

(2)

newly

discovered

or

previously

unavailable evidence; (3) to prevent manifest injustice, including
misconduct of counsel; and (4) an intervening change in controlling
law.

Motions for amendment or alteration of judgment under Rule

59(e) include motions for reconsideration.

See. e.g., Mitchell v.

Sikorsky Aircraft, 533 Fed. Appx. 354, 357 (5th Cir. March 5, 2013);
see also citing 11 C. Wright &

A. Miller, Federal Practice and

Proc. § 2810.1 at 122 (West 2d ed. 1995). Nevertheless, while Rule
59(e) allows a court to alter or amend a judgment, the Rule may not
be employed to relitigate old matters or raise arguments or present
evidence that could have been raised prior to entry of judgment.
Truvia v. Connick, 577 Fed. Appx. at 327, citing Exxon Shipping Co.
v. Baker, 554 U.S. 471, 485 n.5 (2008)(citing 11 C. Wright &

A.

Miller, Federal Practice and Proc. § 2810.1 at 127-28 (2d ed.
1995).

“‘[A] Rule 59(e) motion is not a proper vehicle for

rehashing evidence, legal theories, or arguments that could have
been offered or raised before the entry of judgment.’”
1

Id.,

Because of this narrow purpose, typically Rule 59(e)
motions are denied. 11 C. Wright and A. Miller, Federal Practice
and Proc. § 2810.1, at p. 128 (West 2d ed. 1995).
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quoting

Templet

v.

HydroChem

Inc.,

367

F.3d

at

479.

“Reconsideration of a judgment after its entry is an extraordinary
remedy that should be used sparingly.”

Templet, 367 F.3d at 479.

The district court has substantial discretion to grant or deny a
motion for reconsideration, keeping in mind that it must “strike
the proper balance” between the need for finality and “the need to
render just decisions on the basis of all the facts.”

Edward H.

Bohlin v. Banning Co., 6 F.3d 350, 353, 355 (5th Cir. 1993).
Defendants’ Procedural Challenge
A threshold issue here is whether Rules 50 and 59 are the
appropriate procedural vehicles to overturn a two-year-old pretrial
order

on

a

motion

to

dismiss,

instead

of

identifying

an

inappropriate action at trial on the part of the Court or the jury
that was legally in error or manifestly unfair.
As noted, a Rule 50 motion for judgment as a matter of law is
to

be

used

to

challenge

the

legal

sufficiency

of

evidence

supporting a verdict or a legal bar to a verdict that is contrary
to law.2

Defendants Pelican Worldwide, Inc. (“Worldwide”) and

Thomas Joseph Mueller (“Mueller”) argue that instead of asserting
an erroneous verdict or a proper ground for a new trial, Ultraflo’s

2

Defendants maintain that the proper purpose of a motion
for new trial under Rule 50 is to demonstrate that the verdict
was against the great weight of evidence or that there was some
manifest error at trial. They emphasize that Ultrasound is not
complaining about the verdict or how it was legally incorrect as
a matter of law, nor about a trial error.
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motion is simply an effort to reverse the Court’s decision (#160),
made two years before Ultraflo’s motion, that Ultraflo’s claim for
unfair

competition

Copyright Act.

by

misappropriation

was

preempted

by

the

They further note that Ultraflo did not plead a

cause of action for unfair competition in its third amended
complaint (#169) at the time of trial.

Moreover it is uncertain

that Ultraflo’s renewed motion for judgment as a matter of law
regarding preemption of the unfair competition by misappropriation
claim is properly and timely brought under Rule 50(b), since
Ultraflo failed to request that relief in a prior Rule 50(a) before
the return of the jury verdict.
Ultraflo

responds

that

although

it

did

not

raise

the

preemption issue in a Rule 50(a) motion for judgment as a matter of
law, the broad language of Rule 59 states, “The court may, on
motion, grant a new trial on all or some of the issues . . . after
a jury trial, for any reason for which a new trial has heretofore
been granted in an action at law in federal court.” Ultraflo cites
cases in which a court has re-examined the granting of pretrial
partial summary judgments, construing a motion to be one to alter
or amend a judgment under Rule 59(e).

See Frankl v. Netopia, Inc.,

2008 WL 4826023, at *1 (N.D. Tex. Nov. 4, 2008)(construing the
court’s ruling on a pretrial motion for partial summary judgment,
“rather than the outcome of a jury trial or nonjury trial,” as a
motion to alter or amend a judgment under Rule 59(e)); Gray v.

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Burke, No. 05 C 59, 2007 WL 2688447, at *2 (N.D. Ill. Sept. 11,
2007)(same; “‘Any motion that draws into question the correctness
of the judgment is functionally a motion under Civil Rule 59(e),
whatever its label.’”)(quoting St. Mary’s Hosp. Med. Ctr. v.
Heckler, 753 F.2d 469, 474 (7th Cir. 1980)(in turn quoting 9 Moore’s
Federal Practice ¶ 204.12[1], at 4-67 (2d ed. 1980)), and citing in
accord, Committee for First Amendment v. Campbell, 962 F.2d 1517,
1523 (10th Cir. 1992).
The Court agrees with Defendants that Rule 50(b) is not the
appropriate vehicle to challenge the Court’s pretrial dismissal of
Ultrasound’s claim for unfair competition by misappropriation as
preempted by the Copyright Act.

Not only does Ultraflo’s motion

not relate to the jury verdict, but the claim was not raised in
Rule

50(a)

motion

before

the

jury

verdict

was

submitted.

Nevertheless, for reasons stated above, the Court may and does
construe it as a motion for new trial and to alter or amend
judgment, in essence as a motion for reconsideration, under Rule
59.
Substantive Challenges in #294
Ultraflo asserts two grounds for its motion for new trial
and/or

to

alter

or

amend

judgment:

(1)

the

Court

erred

in

dismissing Ultraflo’s unfair competition by misappropriation based
on preemption by the Copyright Act of 1976, 17 U.S.C. §§ 101 et

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seq.3; and (2) additionally, or alternatively, Ultraflo should be
granted a new trial because the jury4 erred in finding Defendants
not liable on Ultraflo’s claims for misappropriation of trade
secrets and copyright infringement.
Regarding the first ground, the Court’s purported error in
#160,

Ultraflo argues that Ultraflo’s claim does not fall within

the subject matter of copyright because (1) its valves are not
protectable by copyrights because they are “useful” articles under
17

U.S.C.

§

101,

and

thus

Ultraflo’s

unfair

competition

by

misappropriation claim cannot be preempted by copyright law; and
(2) Texas’ unfair competition by misappropriation claim has an
additional element not found in the Copyright Act, i.e., breach of
a confidential relationship or discovery by improper means.
Observing that the valve is a useful article, but that the
technical drawings are not because they are created to convey
information about the appearance of the article and thus do not
meet the requirement of § 101, #236 at p. 75, the Court previously
addressed this “useful” article argument in #160 at p. 3 and at
length in #236 at pp. 72-82.

In the latter document the Court,

employing the “extra element” test, indicated as well why this
cause of action protected rights that are equivalent to the
copyright owner’s exclusive right to copy and reproduce and to use

3

See #160, Opinion and Order, entered on September 7, 2012.

4

#279.
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the technical drawings.

#236 at pp. 76-82.5

As noted,“‘[A] Rule

59(e) motion is not a proper vehicle for rehashing evidence, legal
theories, or arguments that could have been offered or raised
before the entry of judgment.’”

Truvia, 577 Fed. Appx. at 327,

quoting Templet v. HydroChem Inc., 367 F.3d at 479.

Ultraflo’s

contentions clearly fall into this category.
Additionally or alternatively, Ultraflo seeks a new trial on
the grounds that the jury’s verdict was against the great weight of
evidence relating to Ultraflo’s claims for misappropriation of
trade secrets and copyright infringement.

The Court responds that

Ultraflo fails to show that the evidence preponderates against the
verdict on these two claims.

In their memorandum in opposition

(#295) to Ultraflo’s motion, Defendants cite substantial evidence
supporting the jury’s finding of no trade secret and no copyright
infringement.
Accordingly, the Court
ORDERS that Ultraflo’s renewed motion for judgment as a matter

5

As argued in Defendants’ memorandum in opposition, #295 at
p. 18, no federal or Texas state court has held there is an extra
element of a breach of confidential relationship for a claim of
unfair competition by misappropriation claim. Instead, breach of
confidential relationship is an element for trade secret
misappropriation. Alcatel v. DGI Technologies, 166 F.3d 772,
785-86 (5th Cir. 1999)(state law claim for unfair competition was
preempted by the Copyright Act); #116 at p. 11; M-I LLC v.
Stelly, 733 F. Supp. at 772, 778, 785-87. Ultraflo did not plead
a claim for unfair competition through a breach of fiduciary duty
apart from trade secrets.
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of

law

under

Federal

Rule

of

Civil

Procedure

50(b)

or,

alternatively, motion for new trial under Federal Rule of Civil
Procedure 59 (#294) is DENIED.
SIGNED at Houston, Texas, this

22nd

day of

January , 2015.

___________________________
MELINDA HARMON
UNITED STATES DISTRICT JUDGE

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