Consumer Products Re v. Jimmy Jensen ( 2009 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 07-2599
C ONSUMER P RODUCTS
R ESEARCH & D ESIGN, INC.,
Plaintiff-Appellee,
v.
JIMMY JENSEN, R YAN JENSEN
A ND INNOTEK C ORP.,
Defendants-Appellants.
Appeal from the United States District Court
for the Western District of Wisconsin.
No. 06 C 625—John C. Shabaz, Judge.
A RGUED S EPTEMBER 16, 2008—D ECIDED JULY 16, 2009
Before C UDAHY, FLAUM and R OVNER, Circuit Judges.
R OVNER, Circuit Judge. Consumer Products Research &
Design, Inc. (“CPRD”) holds a patent for a smoke detector
system that uses wireless technology. Robert Kirshner
is the president of CPRD and is the inventor of the pat-
ented system. Jimmy Jensen (“JJ”) represented himself
to be the president of an entity called Tanj Company. His
son, Ryan Jensen (“RJ”), is the president of Innotek Corpo-
ration. In July 2004, CPRD entered into a licensing agree-
2 No. 07-2599
ment with Tanj and Innotek. Tanj was to develop and
market the invention, and Innotek Corp was to act as a
sub-licensee that was responsible for manufacturing
and selling the patented technology. JJ executed the
licensing agreement on behalf of Tanj and RJ signed on
behalf of Innotek. Ultimately the relationship fell apart
and CPRD filed this suit, alleging fraudulent induce-
ment and breach of contract. A bifurcated trial in
June 2007 resulted in a verdict against the Jensens and
Innotek in the amount of $623,900 in compensatory dam-
ages. The jury also awarded the plaintiff $100,000 in
punitive damages against JJ. The Jensens and Innotek
now appeal, and we affirm.
The defendants essentially raise two arguments in this
appeal: that the evidence was insufficient to support the
jury’s verdict, and that the district court improperly
failed to give a requested jury instruction. Because the
majority of the defendants’ claims fail on procedural
grounds, most of the underlying facts of the case are
irrelevant to the appeal. CPRD’s central allegation is
that the Jensens and Innotek made material, fraudulent
misrepresentations as to the existence or capabilities of
Tanj, the designated licensee under the contract, and then
failed to pay any of the money due under the licensing
agreement.
We turn first to the issue of insufficiency of the evi-
dence. At the conclusion of CPRD’s evidence in the liability
phase of the trial, the Jensens and Innotek moved for
judgment as a matter of law under Federal Rule of
Civil Procedure 50(a), arguing that the evidence was
insufficient for a reasonable jury to find in CPRD’s favor.
No. 07-2599 3
The court reserved ruling on the motion until the close
of all evidence in the liability trial and then denied it.
After the jury returned its verdict, neither the Jensens
nor Innotek filed postverdict motions under Rule 50(b) or
Rule 59.
A party’s failure to comply with Rule 50(b) forecloses
any challenge to the sufficiency of the evidence on appeal.
Unitherm Food Sys., Inc. v. Swift-Eckrich, Inc., 546 U.S.
394, 404-07 (2006). ”A postverdict motion is necessary
because ‘[d]etermination of whether a new trial should
be granted or a judgment entered under Rule 50(b) calls
for the judgment in the first instance of the judge who
saw and heard the witnesses and has the feel of the
case which no appellate printed transcript can im-
part.’ ” Unitherm, 546 U.S. at 401 (quoting Cone v. West
Virginia Pulp & Paper Co., 330 U.S. 212, 216 (1947)). See also
Unitherm, 546 U.S. at 407 (“we hold that since
respondent failed to renew its postverdict motion as
specified in Rule 50(b), there was no basis for review of
respondent’s sufficiency of the evidence challenge in
the Court of Appeals.”). Although the defendants here
filed a Rule 50(a) motion prior to the jury verdict on
liability, their failure to file a postverdict motion
under Rule 50(b) forfeits all of their claims regarding
insufficiency of the evidence. See Pearson v. Welborn, 471
F.3d 732, 738-39 (7th Cir. 2006). We therefore may not
consider those claims in this appeal.1
1
The defendants belatedly attempted in their reply brief to
distinguish Unitherm as inapplicable when evidentiary errors
(continued...)
4 No. 07-2599
The only remaining issue, then, involves the district
court’s decision not to give the defendants’ re-
quested “Party-In-Interest Instruction” to the jury. The
defendants asked the district court to instruct the jury
that if an entity does not have a legal existence separate
from the person owning or operating it, the person and
entity would be one and the same for legal purposes. The
defendants’ argument on appeal focuses largely on the
district court’s refusal to give the requested instruction
during the damages trial. We review the district court’s
decisions on jury instructions for abuse of discretion.
Russell v. National R.R. Passenger Corp., 189 F.3d 590, 593
(7th Cir. 1999); Spiller v. Brady, 169 F.3d 1064, 1066 (7th
Cir. 1999). We consider jury instructions in their entirety,
and consider whether the jury was misled in any way
and whether the jury had an understanding of the
issues. Russell, 189 F.3d at 593.
The jury instructions given during the damages phase
of the trial were not in any way improper or misleading.
First, as the plaintiff points out, the instructions given
accurately reflected well-established law on the measure
of damages for fraudulent misrepresentation, tracking
the language of the Restatement (Second) of Torts § 549(2).
The defendants make no argument to the contrary. More-
over, it is difficult to understand why, after JJ already
1
(...continued)
are at issue, citing Fuesting v. Zimmer, Inc., 448 F.3d 936 (7th
Cir. 2006). But the defendants’ arguments all fit squarely
within the confines of Unitherm because the defendants have
not raised any evidentiary errors in their briefs on appeal.
No. 07-2599 5
had been found liable, an instruction that he and Tanj
should be considered a single entity for legal purposes
would have been relevant, let alone necessary. This is
especially true as CPRD was not seeking any damages
from Tanj. The defendants never clearly articulate a
reason, nor do they explain the practical and prejudicial
result of failing to give their proffered jury instruction,
even after the judge expressed his opinion that “it
didn’t seem to be an instruction that was meaningful as
it relates to what the jury is supposed to determine.”
R. 123, Tr. at 2-6. Quite simply, the district court did not
abuse its discretion when instructing the jury during
the damages phase.
As for any argument that the court erred by not giving
the Party-In-Interest jury instruction during the liability
phase of the trial, the defendants failed to properly pre-
serve such an objection. See Fed. R. Civ. P. 51(c). Rule 51
requires that objections to jury instructions be made in a
timely fashion, on the record and with sufficient
specificity to allow the presiding judge the oppor-
tunity to correct potential mistakes.2 The defendants first
requested the Party-In-Interest jury instruction during the
liability phase of the trial, and the court denied that
2
CPRD improperly cites to Wisconsin procedural rules in
support of its argument. We apply state law to substantive
issues in cases before us on diversity jurisdiction (see, e.g., RLI
Ins. Co. v. Conseco, Inc., 543 F.3d 384, 390 (7th Cir. 2008)), but
“[f]rom beginning to end, diversity litigation is conducted
under federal rules of procedure.” Mayer v. Gary Partners &
Co., Ltd., 29 F.3d 330, 334 (7th Cir. 1994).
6 No. 07-2599
request. The defendants then failed to make any
argument in support of the instruction or lodge any
objection to the district court’s decision not to give the
instruction. Under Rule 51(b), the court “must inform
the parties of its proposed instructions . . . before instruct-
ing the jury and before final jury arguments.” Fed. R.
Civ. P. 51(b)(1). The court must also give the parties an
opportunity to object on the record and out of the jury’s
hearing before the court instructs the jury. Fed. R. Civ. P.
51(b)(2). The court informed the parties which proposed
instructions it had accepted and which it had rejected
(including, specifically, the Party-In-Interest instruction)
at a conference on the record and outside the presence
of the jury midway through the first day of the trial.
R. 122, Tr. at 1-126. After testimony for the liability
phase concluded, and immediately before the commence-
ment of closing arguments, the court gave the attorneys
an opportunity to object to the jury instructions. R. 122,
Tr. at 1-161. The court asked counsel for both the plain-
tiff and the defendants if they had any comments or
concerns with the jury instructions and both replied “no.”
Id. Immediately after instructing the jury, the court
called the lawyers to a sidebar outside the hearing of
the jury and asked if they had any comments regarding
the court’s reading of the instructions. R. 122, Tr. at 1-
194. Again, both lawyers stated that they had no com-
ments or concerns.
The defendants argue that their request for the instruc-
tion followed by the court’s denial was sufficient to
preserve the issue for review. In particular the defen-
dants contend that lodging an objection after the court
No. 07-2599 7
denied the requested instruction would have been a
futile act. We have repeatedly rejected this very argu-
ment. See Griffin v. Foley, 542 F.3d 209, 221 (7th Cir. 2008)
(rejecting the argument that the mere tendering of pro-
posed instructions different from the instructions given
is sufficient to preserve the objection); Dawson v.
New York Life Ins. Co., 135 F.3d 1158, 1165 (7th Cir. 1998)
(to preserve an objection to a court’s refusal to use a
proposed jury instruction, the objecting party must do
more than submit a proposed instruction to the court);
Gordon v. Degelmann, 29 F.3d 295, 298 (7th Cir. 1994)
(tendering one’s own instruction does not satisfy Rule 51;
Rule 51 requires the parties to draw the court’s attention
to problems so that they may be corrected before the
jury begins deliberations). The defendants failed to
draw the court’s attention to any problems with the
instructions during the liability phase; indeed, the defen-
dants expressly claimed to have no concerns with the
instructions when asked. The objection is therefore for-
feited.
Rule 51(d)(2) does, however, allow a court to consider a
plain error in the jury instructions that has not been
preserved as required if the error affects substantial rights.
See, e.g., Griffin, 542 F.3d at 222 (“Nevertheless, as a last
resort, Rule 51 now allows a court to remedy an error in
the instructions that was not properly preserved if the
error is plain and affects substantial rights”); Mesman v.
Crane Pro Servs., 512 F.3d 352, 357 (7th Cir. 2008) (a
plain error in jury instructions in a civil case is now a
basis for reversal under Rule 51(d)(2)). Here, where
appellants cannot articulate how they were affected by
8 No. 07-2599
the refused jury instruction, let alone how their “sub-
stantial rights” were affected, there is no reason for
this court to interfere. See Ammons-Lewis v. Metropolitan
Water Reclamation Dist. of Greater Chicago, 488 F.3d 739,
751 (7th Cir. 2007) (in plain error review of jury instruc-
tions in civil cases, the party complaining on appeal
must show not only that an error occurred that, in retro-
spect, is obvious, but also that the error affected the
substantial rights of the appellant); Higbee v. Sentry Ins.
Co., 440 F.3d 408, 409 (7th Cir. 2006) (plain error review
of jury instructions under Rule 51(d)(2) is limited and
discretionary).
For the foregoing reasons, the judgment of the district
court is A FFIRMED.
7-16-09