Otos Tech Co. v. OGK America, Inc. ( 2008 )

Opinions of the United
2008 Decisions States Court of Appeals
for the Third Circuit
10-10-2008
Otos Tech Co Ltd v. OGK Amer Inc
Precedential or Non-Precedential: Non-Precedential
Docket No. 07-3627
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
__________
Nos. 07-3627 & 07-3775
__________
OTOS TECH CO., LTD.
v.
OGK AMERICA, INC.;
YALE KIM a/k/a Youngil Kim,
Third Party Plaintiffs
v.
OTOS OPTICAL CO., LTD.;
MOON YOUNG HUH,
Third Party Defendants
OTOS TECH CO., LTD.; OTOS OPTICAL CO., LTD; MOON YOUNG HUH,
Appellants in 07-3627
OGK AMERICA, INC.; YALE KIM,
Appellants in 07-3775
__________
On Appeal from the United States District Court
For the District of New Jersey
(Civ. No. 03-1979)
District Court Judge: Honorable William H. Walls
___________
Argued on September 22, 2008
___________
Before: BARRY, AMBRO and GARTH, Circuit Judges,
(Filed: October 10, 2008)
Peter S. Pearlman (Argued)
Jessica V. Henry
Cohn Lifland Pearlman Herrmann & Knopf LLP
Park 80 Plaza West One
Saddle Brook, NJ 07663
Attorneys for Plaintiff/Appellant
Marc D. Haefner (Argued)
Nicole B. Dory
Connell Foley LLP
85 Livingston Avenue
Roseland, NJ 07068
Attorneys for Defendants/Appellees
___________
OPINION
___________
GARTH, Circuit Judge:
This appeal arises out of a jury verdict awarding the defendant OGK America, Inc.
(“OGK”) $910,000 on its counterclaim for breach of the implied covenant of good faith and
fair dealing. Although the parties raise numerous complaints regarding the trial proceedings,
the essence of the appeal is whether the verdict was supportable by the evidence in the
record. Plaintiff argues that the verdict was against the weight of the evidence, or in the
alternative, that the evidence was legally insufficient. We will affirm.
I.
In 1998, Mr. Moon Young Huh, president of Otos Tech Co., Ltd. (“Otos”), and Mr.
Yale Kim, president of OGK, entered into an oral agreement under which OGK would act
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as Otos’s exclusive agent for sales of welding helmets in the United States. In the following
years, OGK was instrumental in establishing Otos’s presence in the United States. OGK
increased Otos’s U.S. sales to $8.2 million, representing 88.7% of Otos’s worldwide
revenues. Kim received a commission for his services, initially 5% in 1998, then reduced
by mutual agreement to 4% in 1999 and again to 3% in 2001.
In December 2002, Kevin Lee, an employee at Otos, proposed reducing Kim’s
commission further to 2.5%. Affronted, Kim confronted Huh in his office in Korea.
Nevertheless, after reconsideration, Kim faxed a letter to Otos the following month accepting
the reduced commission.
Business continued as normal until February 3, 2003, when Kim sent Otos a proposed
written commission contract. In the text of the fax, Kim noted his desire to “clear any
mistrust between us,” and stated that the agreement was “merely a written document of what
we already agreed on.” J.A. 123.
Lee responded on February 4, 2003, but did not directly address Kim’s request for a
formalized commission agreement. Instead, Lee asked for marketing projections and
customer information, and asked Kim “to promptly relay customers’ requests to [Otos]”
going forward. J.A. 124. Lee added that “the rate of commission is certainly not the most
pressing matter at hand. If we can establish mutual trust, the commission rate will not be an
issue.” Id.
In response, Kim asked:
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What does trust mean? Does trust mean to change everything as
you want without notice? If you think commission rate is not so
important, why are you continually trying to reduce it? . . . I
need more than verbal statements of trust; for my own
protection, I need written agreements. . . . Our relationship is
meant to serve our mutual interests; otherwise we should go our
separate ways. Therefore, I need a firm written statement from
you regarding your intentions.
J.A. 125.
On February 5, 2003, Otos declined to execute the contract, arguing that it reflected
Kim’s lack of trust. Otos further instructed that Kim was “not to be involved in the business
until we can get together to settle our relationship.” Appellant’s Br. 6-7; J.A. 119. But
Otos’s e-mail did not clearly terminate the relationship; rather, it stated that Otos would
“willingly accept the commission rate of 2.5%, but we reserve the right to consider other
options if the above matters are not improved.” J.A. 119.
Kim responded via fax that his understanding was that, by declining to sign the
commission agreement, Otos was terminating the relationship. He claimed entitlement to
commissions on projected sales for the next five years under “international commercial law
and custom,” J.A. 120, but proposed that he was willing to accept just three years of
commissions to “settle” the dispute as promptly as possible. He noted that he would take this
amount out of account receivables in the possession of OGK. Otos did not respond to Kim,
but instead instructed its customers that OGK’s agency was terminated by “mutual
agreement.” J.A. 121.
On February 19, 2003, Otos discovered that Kim had retained $587,755.05 in
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customer payments that he had failed to forward to Otos. Unable to recover the funds from
Kim, Otos filed suit alleging embezzlement, breach of contract, and conversion. OGK
asserted counterclaims against Otos for breach of contract, breach of compromise agreement,
and breach of implied covenant of good faith and fair dealing. OGK alleged that the parties
had an oral agreement for a term of 15 years, that Otos prematurely terminated the
agreement, and that Kim’s February 5, 2003 fax constituted a settlement offer to which Otos
assented.
The jury found that: (1) OGK breached the contract, but that there were no damages
for the breach; (2) OGK converted $587,755.05 in customer payments and owed this amount
to Otos; and (3) Otos was liable for breach of the implied covenant of good faith and fair
dealing and owed $910,000 in damages to OGK.
Otos filed a motion for a new trial, which the District Court denied on August 13,
2007. Otos filed a timely notice of appeal and OGK cross-appealed.
II.
We exercise jurisdiction under 28 U.S.C. § 1291. The District Court had subject
matter jurisdiction under 28 U.S.C. § 1332(a). We review the District Court’s denial of a
motion for new trial for abuse of discretion. Montgomery County v. Microvote Corp., 320
F.3d 440, 445 (3d Cir. 2003). “Deferential review is appropriate when considering whether
a verdict is against the weight of the evidence because the district court was able to observe
the witnesses and follow the trial in a way that we cannot replicate by reviewing a cold
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record.” Greenleaf v. Garlock, Inc., 174 F.3d 352, 366 (3d Cir. 1999) (internal quotations
omitted). “[N]ew trials because the verdict is against the weight of the evidence are proper
only when the record shows that the jury’s verdict resulted in a miscarriage of justice or
where the verdict, on the record, cries out to be overturned or shocks our conscience.”
Williamson v. Consol. Rail Corp., 926 F.2d 1344, 1353 (3d Cir.1991). An internally
inconsistent verdict also can be a ground for ordering a new trial. Malley-Duff & Assocs.,
Inc. v. Crown Life Ins. Co., 734 F.2d 133, 145 (3d Cir. 1984).
We review for plain error where a party failed to preserve its objections to a jury
charge or instruction, or to the failure to give a jury charge or instruction. Franklin
Prescriptions, Inc. v. N.Y. Times Co., 424 F.3d 336, 339-40 (3d Cir. 2005). For an appellate
court to correct a forfeited error, there must be an “error,” the error must be “plain,” and the
plain error must “affect substantial rights.” United States v. Olano, 507 U.S. 725, 732-34
(1993). Plain error review is discretionary and should only be invoked in the civil context
“‘where the error is so serious and flagrant that it goes to the very integrity of the trial.’”
Fashauer v. N.J. Transit Rail Operations, Inc., 57 F.3d 1269, 1289 (3d Cir. 1995) (quoting
United States v. Carson, 52 F.3d 1173, 1188 (2d Cir. 1995)).
III.
We are satisfied that the evidence presented at trial supports the jury’s verdict.1 The
1
Ordinarily, any claim based on insufficiency of the evidence is waived when the
movant failed to move for judgment as a matter of law under Federal Rule of Civil
Procedure 50 before the jury retired to deliberate. Greenleaf v. Garlock, Inc., 174 F.3d
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jury could have accepted the evidence in the record that Otos intended all along to exclude
Kim from any significant profits from his sales efforts, yet willfully misled Kim as to the
longevity of the arrangement. Not only did Otos steadily reduce Kim’s commission rates
over a period of four years for reasons unrelated to performance, but it already had coopted
the first client Kim procured, providing prior precedent for such practices.
Kim also testified that Huh told him he did not want Kim to earn too much money.
Otos confirmed that it thought it “natural” for Kim’s commission rates to decrease as the
sales volume increased—even though the reasons given at the time made no mention of sales
volume. Moreover, the last rate decrease was proffered by a lower-level employee rather
than the president of Otos, a change from prior practice that, culturally, could have been
viewed by the jury as a deliberate slight to someone whom Otos had no intention of retaining
as an agent.
At the same time, the jury had more than enough evidence to conclude that Otos
avoided discussing the length of the contract every time Kim sought confirmation of his
commission rates, and then ceased dealing with him as soon as he attempted to secure his
352, 364-65 (3d Cir. 1999). However, Otos argues that this waiver was itself waived
because OGK did not raise it in its opposition to Otos’s motion for a new trial under Rule
59. See Williams v. Runyon, 130 F.3d 568, 571-72 (3d Cir. 1997) (finding a waiver of
waiver where a party failed to object to a movant’s Rule 50(b) motion specifically on the
grounds that the issue was waived by an inadequate Rule 50(a) motion). We find it
unnecessary to address or analyze this principle because, by any account, there was more
than sufficient evidence from which a jury could infer that Otos was liable for the
manner in which it performed the contract.
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legal rights in writing. Kim testified that any attempts to discuss the commission rate were
repeatedly downplayed. Instead, he was told that “[t]he important thing is whether the ADF
helmet can be sold or not,” J.A. 312, and that a close relationship based on “mutual trust”
was more important than the specific commission rate, J.A. 291, 342. Indeed, Otos actively
reassured Kim that they would work together until Kim reached his 70s.2 Yet, as soon as
Kim attempted to confirm this understanding in writing, Otos refused to sign any agreement
and advised him that this effort conveyed a “lack of trust.” Appellant’s Br. 6.
In assessing the weight of the evidence, we do not find that the verdict of $910,000
in favor of OGK shocks the conscience, nor was it internally inconsistent. See Sons of
Thunder, Inc. v. Borden, Inc., 690 A.2d 575 (N.J. 1997); Bak-A-Lum Corp. of America v.
Alcoa Bldg. Prods., Inc., 351 A.2d 349 (N.J. 1976). Although different verdicts might have
been reached or imagined, a damages verdict will be affirmed if “there is any view of the
case which reconciles the [jury’s] various answers.” McAdam v. Dean Witter Reynolds, Inc.,
896 F.2d 750, 763 (3d Cir. 1990) (quoting Bradford-White Corp. v. Ernst & Whinney, 872
F.2d 1153, 1159 (3d Cir. 1989) (emphasis added)). Here, there was sufficient evidence of
OGK having established Otos’s product in the United States; OGK having represented Otos
for years; and OGK’s anticipation of commissions in future years. Accordingly, we do not
find that the District Court abused its discretion in denying Otos’s motion for a new trial.
2
In his testimony, Kim stated that he told Huh that the age of 60 would be
sufficient.
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Otos also argues that the District Court erred in its charge to the jury. Otos contends
that the charge misled the jury to believe it could find both a breach of implied covenant and
a breach of contract based on the same conduct: the termination of the contract.
Alternatively, Otos states that the charge failed to instruct the jury on the need to find “bad
faith.”
The District Court did not err in its charge or rulings. Hence, we are satisfied that the
District Court Judge’s charge did not constitute plain error. Although the claims for breach
of implied covenant and breach of contract were closely related, the jury was instructed that
performance is distinct from termination, and it did not conflate the two concepts in
concluding that OGK breached the contract while Otos breached the implied covenant.
Moreover, although the District Court did not instruct the jury that it needed to find an
affirmative act of bad faith or unconscionable behavior, the District Court did give an
instruction that comported with the definition of “good faith” in the UCC. See Wade v.
Kessler Institute, 778 A.2d 580, 589 (N.J. Super. Ct. App. Div. 2001).
Otos raises a host of other complaints, including that the District Court erred in
denying summary judgment on OGK’s claim for breach of implied covenant; that the District
Court erred in delaying the dismissal of OGK’s claim that Kim’s February 5, 2003 fax was
a settlement offer, which allowed days of testimony that the jury could not ignore; that the
curative instruction was inadequate; and that OGK nevertheless used excluded evidence
regarding this settlement offer at closing argument. We find no merit in these claims.
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On cross-appeal, OGK requests that the District Court’s judgment be amended as a
matter of law to include post-judgment interest on the $910,000.3 Otos does not oppose this
claim but merely states that it also is entitled to post-judgment interest on its award of
$587,755.05. We agree that post-judgment interest is added as a matter of law. Dunn v.
HOVIC, 13 F.3d 58, 61-62 (3d Cir. 1993) (“[P]ost-judgment interest is awarded by statute
as a matter of law so it is automatically added, whether or not the district court orders it.”).
Accordingly, we will remand to the District Court to add an award of post-judgment interest
to OGK on the amount of $322,244.95—the difference between $910,000 and $587,755.05.4
IV.
For the foregoing reasons, we will affirm the District Court’s order filed August 13,
2007 as to the principal amounts, and remand to the District Court to add post-judgment
interest.
3
OGK also argues that the District Court erred in failing to dismiss Otos’s
conversion claim. We find no merit in this argument. We need not address OGK’s third
cross-claim as to whether its claim regarding the settlement offer should be allowed on
retrial because we do not remand for a new trial.
4
OGK argues that Otos already received post-judgment interest on a duplicate
judgment in Korea, and therefore should not receive post-judgment interest here.
Because the issue of duplicate judgment is not before us and is not reflected in the
record, we decline OGK’s invitation to address the issue of duplicate post-judgment
interest.
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