Mist-On Systems, Inc. v. Nouveau Body & Tan, LLC

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
June 5, 2009
No. 07-10375
Charles R. Fulbruge III
Clerk
MIST-ON SYSTEMS, INC., and PRESIDENT THOMAS J. LAUGHLIN,
Plaintiffs-Appellants,
versus
NOUVEAU BODY & TAN, LLC; MARIE C. RALSTON;
TERRI J. OUELLETTE,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Texas
No. 4:03-CV-843
Before JOLLY, SMITH, and BENAVIDES, Circuit Judges.
JERRY E. SMITH, Circuit Judge:*
Mist-On Systems, Inc. (“Mist-On”), and Dr. Thomas J. Laughlin 1 sued
*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
1
We refer to appellants collectively as “Laughlin.”
No. 07-10375
Nouveau Body & Tan, LLC (“Nouveau”), and two of its employees for defama-
tion, trade disparagement, conspiracy, breach of contract, and tortious interfer-
ence. Nouveau countersued, alleging violations of the Texas Deceptive Trade
Practices Act (“DTPA”), fraud, and negligence. The jury found for Nouveau and
awarded $629,000. The district court later awarded Nouveau attorneys’ fees.
Laughlin appeals, and we affirm.
I.
Laughlin invented a tanning booth that automatically sprayed a sunless
tanning solution over one’s entire body. In 1999, he founded Mist-On to manu-
facture and market the two necessary components of his tanning system: the
sunless tanning solution and the “Mist-On Tan Booth,” inside which the solution
was applied. Laughlin served as the president of the company and used inde-
pendent contractors as employees. Mist-On was initially successful and attract-
ed national coverage.
The media coverage caught the attention of Tim and Marie Ralston and
Terri and Ray Ouelette, who had collectively founded Nouveau in Phoenix, Ari-
zona. They planned to use Nouveau to create a chain of anti-aging salons and
felt that Mist-On Tan Booths would improve their salons. In 2001, the Ralstons
traveled to Las Vegas, Nevada, to meet with Laughlin at a trade show. Both
parties agree that negotiations for Mist-On to supply Nouveau began at the
meeting, though Nouveau additionally alleges that Laughlin gave a personal
warranty at that meeting.
Nouveau entered a lease/purchase agreement with Mist-On and a third
party to acquire two Mist-On Tan Booths. Later, Nouveau acquired a used booth
for their new Chandler, Arizona salon; Nouveau alleges that the booth was also
warrantied by Dr. Laughlin. Nouveau also entered another agreement with
Mist-On under which Nouveau had exclusive rights to supply Mist-On Tan
2
No. 07-10375
Booths to certain health clubs but had to purchase two booths a month.
Nouveau eventually had problems with its booths: They often did not
operate, required constant repair, and experienced significant mold growth.
Mist-On alleged that Nouveau damaged the booths by using an unauthorized
tanning solution, though Nouveau denied that. Nouveau’s business suffered
from the booth-related problems, and eventually both of its salons went out of
business. Nouveau subsequently defaulted on its payments for both their
lease/purchase agreement and its rent. Nouveau contacted Mist-On to complain
about the trouble, and both sides threatened legal action.
Mist-On sued, alleging the above-stated causes of action; Nouveau coun-
tersued. The jury awarded Nouveau $629,000 in damages and gave Mist-On
nothing. The district court later awarded Nouveau attorneys’ fees.
II.
A.
Laughlin alleges insufficiency of the evidence. First, he says that there
was insufficient evidence for the jury to have found him liable in his individual
capacity. The district court denied Laughlin’s Federal Rule of Civil Procedure
50(b) motion.2
This Court reviews de novo the district court’s ruling on a motion for
judgment as a matter of law, applying the same legal standard used
by the district court. Although our review is de novo, our standard
of review with respect to a jury verdict is especially deferential.
Therefore, judgment as a matter of law should only be granted if the
2
Despite conflicting evidence, we assume, for purposes of this appeal, that Laughlin
made a proper rule 50(a) motion at the close of all evidence. See Flowers v. S. Reg’l Physician
Servs. Inc., 247 F.3d 229, 238 (5th Cir. 2001) (“If a party fails to move for judgment as a matter
of law under Federal Rule of Civil Procedure 50(a) on an issue at the conclusion of all of the
evidence, that party waives both its right to file a renewed post-verdict Rule 50(b) motion and
also its right to challenge the sufficiency of the evidence on that issue on appeal” (footnote and
citations omitted).).
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No. 07-10375
facts and inferences point so strongly and overwhelmingly in the
movant’s favor that reasonable jurors could not reach a contrary
conclusion.
Coffel v. Stryker Corp., 284 F.3d 625, 630 (5th Cir. 2002) (citations, ellipses, and
internal quotation marks omitted).
Laughlin contends that the district court erred in denying his rule 50(b)
motion because, as Mist-On’s president, he could be liable only in his corporate,
rather than individual, capacity. Laughlin’s position as president does not, how-
ever, immunize him from liability; he could still have personally warrantied the
products to Nouveau.
There is evidence to show he did. Marie Ralston testified that she got a
personal warranty from Laughlin in Las Vegas. Tim Ralston also testified to a
personal guarantee from Laughlin at the same meeting. Although Laughlin pre-
sented testimony indicating he acted in his corporate capacity, we “disregard all
evidence favorable to the moving party that the jury is not required to believe.”
Id. at 631 (citation omitted). With our strong deference to the jury’s verdict, and
with some evidence to support Laughlin’s personal warranty of the Mist-On Tan
Booths, we affirm the denial of the rule 50(b) motion.
Laughlin next argues that the district court erred when it refused Laugh-
lin’s motion for a new trial or remittitur based on excessive damages. Nouveau
argues that under Texas law, because Laughlin failed to object to the jury in-
structions, we review for plain error. This is wrong, because federal law, rather
than state law, governs this question.3 Instead, we review for abuse of discre-
tion. See Vogler v. Blackmore, 352 F.3d 150, 154 (5th Cir. 2003). “There is no
abuse of discretion denying a motion for new trial unless there is a complete
3
“It is generally accepted . . . that the question whether a new trial should be granted,
including a new trial on the basis of excessive damages, is a purely procedural one, governed
by federal law.” In re Air Crash Disaster Near New Orleans, La. on July 9, 1982, 767 F.2d
1151, 1155 n.4 (5th Cir. 1985) (citations omitted).
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No. 07-10375
absence of evidence to support the verdict.” Id. (quoting Esposito v. Davis, 47
F.3d 164, 167 (5th Cir. 1995)).
The district court did not abuse its discretion in granting judgment on the
verdict. Nouveau presented an experienced business appraisal specialist who
testified that the fair market value of Nouveau was $575,000. Later, the Ral-
stons testified that they were forced to pay $40,000 to their salon’s landlord and
still owed him another $14,000. The jury awarded the combined total of all of
those figures. Although a jury cannot pull a damages award “out of a hat,” 4 an
award with a rational basis, such as this one, will be upheld.
B.
Laughlin’s next three objections involve the jury instructions. He failed
to make any of these objections at trial. “If a party fails to object with specificity
to a proposed instruction, the right to challenge the instruction on appeal is
waived.” Tex. Beef Group v. Winfrey, 201 F.3d 680, 689 (5th Cir. 2000) (citation
omitted). “Regardless of this waiver, the court may review the instruction for
plain error.” Id. “In the civil context, a jury instruction is plainly erroneous
when (1) an error occurred, (2) the error was clear or obvious, (3) substantial
rights were affected, and (4) not correcting the error would seriously affect the
fairness, integrity, or public reputation of judicial proceedings.” Id. (citation and
internal quotation marks omitted).
Laughlin’s first plain-error argument is that the court erred when it failed
to include a specific damage calculation instruction. He fails, however, to cite
a single rule or statute mandating such an instruction. If he cannot point to any
rule, he cannot meet plain-error review.
Next, Laughlin alleges that the court committed plain error by improperly
4
Neiman-Marcus Group, Inc. v. Dworkin, 919 F.2d 368, 372 (5th Cir. 1990).
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No. 07-10375
wording the jury charge. He notes that the charge on the warranty question dif-
fered from the Texas Pattern Jury Charge. The court changed the pattern
charge sentence “[f]ailing to perform services in a good and workmanlike man-
ner” to read, “[f]ailing to perform goods or services in a good and workmanlike
manner.” (emphasis added). Laughlin claims that this allegedly flawed jury in-
struction was “fatal” to his defense and was the “basis of [the jury’s] subsequent
damage award.”
Laughlin’s argument cannot overcome plain-error review. He presents no
authority requiring that a DTPA warranty claim charge match the Texas Pat-
tern Jury Charge precisely. Noting an error in the grammar or precise wording
of a jury charge, without citing any statute or caselaw showing the change to be
in error, is not sufficient to prove clear error.
Finally, Laughlin avers that the court committed plain error by failing to
submit a spoliation instruction. Nouveau notes that Laughlin failed to discuss
the allegedly tainted evidence at trial, and Laughlin never rebuts this charge.
If Laughlin never brought the evidence to the jury’s attention, the instruction
would have made little sense in the context of the case. Because the evidence
could have been confusing or unhelpful, the court had discretion to deny the
spoliation charge. See United States v. Wise, 221 F.3d 140, 156 (5th Cir. 2000).
C.
Laughlin objects to the award of attorneys’ fees. He has, however, failed
to appeal this issue properly. Federal Rule of Appellate Procedure 3(c)(1) states
that “[t]he notice of appeal must: . . . (B) designate the judgment, order, or part
thereof being appealed.” This rule is jurisdictional in nature. See Torres v. Oak-
land Scavenger Co., 487 U.S. 312, 317-18 (1988). We cannot waive the basic re-
quirement to appeal from the proper order. See Pope v. MCI Telecomm. Corp.,
937 F.2d 258, 266 (5th Cir. 1991).
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No. 07-10375
Laughlin’s notice of appeal is for “the Final Judgment entered in this ac-
tion on the 15th day of February, 2007.” This “Final Judgment” was the court’s
affirming the verdict; the attorneys’ fees order came later, on May 17, 2007. No
other notice of appeal was filed. Laughlin cannot challenge a decision that had
yet to be handed down at the time he filed his appeal, and therefore we do not
examine his attorneys’ fees appeal.
D.
Finally, we examine two claims from Nouveau: that Laughlin (1) waived
his appeal for failure to brief and (2) should be sanctioned for a frivolous appeal.
For failure to brief, Nouveau notes that Laughlin failed to note the appropriate
standard of review on most of his issues, including those governed by plain error.
Federal Rule of Appellate Procedure 29(a)(9)(B) requires that briefs have, for
each issue, “a concise statement of the applicable standard of review (which may
appear in the discussion of the issue or under a separate heading placed before
the discussion of the issues).” Appellants and appellees should note the stan-
dards of review in their brief, and Laughlin’s failure to do so appears disingenu-
ous, considering that plain error review governs most of his appeal. Failure to
note the standard of review on certain issues, however, falls short of the strin-
gent requirements for total waiver. Waiver occurs when a party “fail[s] to pro-
vide any evidenceSSor any legal argument beyond bare assertions.” Nichols v.
Enterasys Networks, Inc., 495 F.3d 185, 190 (5th Cir. 2007). Laughlin has man-
aged to meet this rather undemanding threshold, and we do not find his appeal
waived.
We also do not sanction him for a frivolous appeal. “If a court of appeals
determines that an appeal is frivolous, it may, after a separately filed motion or
notice from the court and reasonable opportunity to respond, award just damag-
es and single or double costs to the appellee.” F ED. R. A PP. P. 38. “A ‘frivolous
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No. 07-10375
appeal’ is one that relies on legal points that are not arguable on their merits.”
Lyons v. Sheetz, 834 F.2d 493, 496 (5th Cir. 1987) (citation omitted).
Laughlin has introduced some bizarre legal arguments and has presented
this court with mostly issues that are either not properly appealed or governed
by plain error review. He has, however, provided some case and record citations
and presents some legitimate legal arguments.5 His appeal, therefore, is not
frivolous.
AFFIRMED.
5
See, e.g., Plattenburg v. Allstate Ins. Co., 918 F.2d 562, 564 (5th Cir. 1990) (sanction-
ing appeal with no relevant case law or record citations).
8