EDITORIAL CABALLERO v. PLAYBOY ENTERPRISES No. 13-10-00586-CV.
359 S.W.3d 318 (2012)
EDITORIAL CABALLERO, S.A. DE C.V. and Grupo Siete International, Inc., Appellants, v. PLAYBOY ENTERPRISES, INC., Appellee.
Court of Appeals of Texas, Corpus Christi-Edinburg.
Rehearing Overruled February 9, 2012.
Andy Taylor , Amanda Peterson , Andy Taylor & Associates, Brenham, Ramon Garcia, Edinburg, Michael Pohl, Montgomery, for Appellants.
Harry M. Reasoner , Penelope E. Nicholson , Matthew Ploeger , Michael A. Heidler , Vinson & Elkins, Houston, Guy Allison , The Allison Law Firm, Corpus Christi, Dana R. Allison , The Allison Law Firm, Brownsville, Ricardo G. Cedillo , Derick J. Rodger , Les Streiber III , Davis, Cedillo & Mendoza, San Antonio, for Appellee.
Before Justices RODRIGUEZ, VELA, and PERKES.
Opinion by Justice RODRIGUEZ.
This is a commercial dispute between appellants, Editorial Caballero, S.A. de C.V. (EC) and Grupo Siete International, Inc. (GSI), and appellee, Playboy Enterprises, Inc. (PEI). For over twenty years EC published and distributed a Spanish language version of Playboy magazine in Mexico and other Latin American countries. In October 1996, PEI and EC entered into a licensing agreement (License Agreement) that provided, in relevant part, that EC could publish a Spanish language version of Playboy for distribution in the United States. GSI was EC's assignee of the U.S. distribution rights to the Spanish language version of Playboy. In January 1998, PEI terminated the License Agreement because EC and GSI allegedly failed to pay certain monies due under the License Agreement and under a Renegotiated Payment Plan Agreement. EC and GSI claimed that PEI caused the failure of the project. Suit was filed. EC and GSI filed claims against PEI, and PEI filed counter-claims against EC and GSI. The case was tried twice to a jury.
Following the first trial, EC and GSI appealed. See Playboy Enter., Inc. v. Editorial Caballero, S.A. de C.V., 202 S.W.3d 250, 276 (Tex.App.-Corpus Christi 2006, pet. denied) (Playboy I). In Playboy I, this Court rendered judgment against EC and GSI on all claims except breach of contract and fraudulent concealment, remanding those claims for a new trial. Id. We also remanded all claims asserted by PEI against EC and GSI. Id.
The second trial, the judgment from which this appeal is taken, began on March 31, 2010. Rejecting PEI's argument that our 2006 decision and the law of the case doctrine precluded many of EC and GSI's claims, the trial court submitted EC and GSI's claims against PEI for breach of the License Agreement, common law fraud, statutory fraud, antitrust violations, and theft. In addition, the trial court submitted PEI's claims against EC and GSI for breach of the License Agreement, breach of the Renegotiated Payment Plan Agreement, and fraud. The jury found against EC and GSI on their claims and in favor of PEI on its claims. The trial court entered judgment in favor of PEI and awarded breach-of-contract damages in the amount of $410,000.
By three issues, with multiple sub-issues, EC and GSI contend that (1) they are entitled to a new trial based on jury misconduct; and (2-3) the evidence is insufficient to support the adverse jury findings. We affirm.
I. JURY MISCONDUCT
By their first issue, EC and GSI contend that the trial court abused its discretion when it denied their motion for new trial based, in part, on allegations of material jury misconduct that caused injury. The jury returned a 10-2 verdict. EC and GSI argue that the trial court abused its discretion in refusing to (1) admit and rely on affidavits from the two dissenting jurors; (2) hear live testimony from any of the jurors, especially the two juror affiants; and (3) grant a new trial based on juror misconduct. PEI responds that the juror affidavits did not contain competent, admissible evidence of jury misconduct, and its objections to those affidavits were properly sustained. We agree with PEI.
A. Standard of Review and Applicable Law
We review a trial court's ruling on a motion for new trial based on jury misconduct for an abuse of discretion. Vela v. Wagner & Brown, Ltd., 203 S.W.3d 37, 48 (Tex.App.-San Antonio 2006, no pet.) (op. on reh'g). An abuse of discretion will be found when the trial court's ruling is arbitrary, unreasonable, or without reference to guiding principles. Goode v. Shoukfeh, 943 S.W.2d 441, 446 (Tex.1997).
Whether jury misconduct occurred and caused injury is a question of fact for the trial court. Golden Eagle Archery, Inc. v. Jackson, 24 S.W.3d 362, 372 (Tex.2000). To obtain a new trial based on juror misconduct, an appellant must show (1) the misconduct occurred, (2) it was material, and (3) it probably caused injury. TEX.R. CIV. P. 327; Golden Eagle Archery, 24 S.W.3d at 372. A motion for new trial based upon jury misconduct must be supported by a juror's affidavit alleging that outside influences were brought to bear upon the jury. Weaver v. Westchester Fire Ins. Co., 739 S.W.2d 23, 24 (Tex. 1987) (per curiam); see TEX.R. CIV. P. 327(b); see also TEX.R. EVID. 606(b).
An outside influence "must emanate from outside the jury and its deliberations." Soliz v. Saenz, 779 S.W.2d 929, 931-32 (Tex.App.-Corpus Christi 1989, writ denied); see Golden Eagle Archery, 24 S.W.3d at 370; King v. Bauer, 767 S.W.2d 197, 198 (Tex.App.-Corpus Christi 1989, writ denied). An outside influence does not include "information not in evidence, unknown to the jurors prior to trial, acquired by a juror and communicated to one or more other jurors between the time the jurors received their instructions from the court and the rendition of the verdict" and does not include "[i]nformation gathered by a juror and introduced to the other jurors by that juror, even if the information were introduced specifically to prejudice the vote...." Soliz, 779 S.W.2d at 932; see, e.g., King, 767 S.W.2d at 198 (holding that "discussion of newspaper articles is not considered an outside influence"). In sum, under this rule, a juror may testify about "improper contacts with individuals outside the jury" or "matters or statements not occurring during the course of the jury's deliberations." Golden Eagle Archery, 24 S.W.3d at 370. However, "[a] juror may not testify as to any matter or statement occurring during the course of the jury's deliberations or to the effect of anything upon his or any other juror's mind or emotions as influencing him to assent to or dissent from the verdict concerning his mental processes in
In support of their jury misconduct allegations in their motion for new trial, EC and GSI attached the affidavits of the two dissenting jurors. The affidavits set out the following three instances that allegedly occurred during jury deliberations:
a. Death in Juror's Family
Personal pressures felt by jurors to wrap up the deliberations do not constitute outside influences. See, e.g., Rosell v. Cent. W. Motor Stages, Inc., 89 S.W.3d 643, 660-61 (Tex.App.-Dallas 2002, pet. denied) (explaining that a statement by the bailiff to jurors that they would have to deliberate another day if they told the court that they were deadlocked was not outside influence); Perry v. Safeco Ins. Co., 821 S.W.2d 279, 281 (Tex.App.-Houston [1st Dist.] 1991, writ denied) (concluding that family pressure to go on vacation was not outside influence); Kirby Forest Indus., Inc. v. Kirkland, 772 S.W.2d 226, 234 (Tex.App.-Houston [14th Dist.] 1989, writ denied) (holding that pressure from employers to return to work, and family, recreational, and personal pressures are not outside influences). The trial court could have reasonably determined that the portions of the jurors' affidavits discussing another juror's statements about a death in her family related to the effect of the death on the juror's mind or emotions or mental processes, as influencing her assent to or dissent from the verdict. See TEX.R. CIV. P. 327(b); TEX.R. EVID. 606(b); Golden Eagle Archery, 24 S.W.3d at 370; Goode, 943 S.W.2d at 446. Therefore, misconduct did not occur, and the trial court could have concluded that the affidavits were incompetent and inadmissible in this regard.
b. Appellate Decision Read on the Internet
The trial court could have made the same determination regarding the portion of one juror's affidavit explaining that another juror said, during deliberations, that he had read the appellate decision involving the first trial. The affidavit which stated that the juror read the decision on the internet, implies internet research. The affidavit did not state, however, that the juror said anything more about the opinion.
Holding that internet research does not constitute an outside influence is also consistent with the general rule that "[i]nformation gathered by a juror and introduced to the other jurors by that juror, even if the information were introduced to prejudice the vote, does not add up to outside influence." Soliz, 779 S.W.2d at 932; see Brandt, 194 S.W.3d at 134 ("[One juror's] affidavit stating that other jurors discussed newspaper articles during deliberations was not evidence of any outside influence, but only described matters on the minds of other jurors during deliberations. The affidavit is, therefore, incompetent to serve as evidence of juror misconduct."). The trial court could have
c. Information Regarding the Sanchez Family and the Jury Foreman's Sister
The same analysis applies to EC and GSI's supporting affidavits setting out that "the jury foreman stated during jury deliberations that he knew the Sanchez family had a lot of money" and that "the jury foreman ... sa[id] that his sister is an attorney and that he knew both the business and financial background of the Sanchez family." Once again, the trial court could have determined that these statements proffered by EC and GSI through the affidavits are incompetent and inadmissible because they occurred during deliberations and do "not add up to outside influence." Soliz, 779 S.W.2d at 932. The trial court could have, therefore, concluded that these statements from the affidavits describe only matters on the mind of another juror during deliberations. See TEX.R. CIV. P. 327(b); TEX.R. EVID. 606(b); Brandt, 194 S.W.3d at 134.
2. Evidentiary Hearing
EC and GSI also argue that when an affidavit avers misconduct, the language of rule 327(a) requires that the trial court grant an evidentiary hearing. See TEX.R. CIV. P. 327(a) ("When the ground of a motion for new trial, supported by affidavit, is misconduct of the jury ... the court shall hear evidence thereof from the jury or others in open court...."). EC and GSI contend that, in this case, the trial court abused its discretion when it did not hold such a hearing.
In support of this argument, EC and GSI rely on Sharpless v. Sim. See 209 S.W.3d 825, 828 (Tex.App.-Dallas 2006, pet. denied). In Sharpless, a verdict for the plaintiff was entered in a double fatality driving accident. Id. at 827. After the verdict, the parties learned that one of the jurors had conducted her own independent internet research of the defendant's driving record. Id. After conducting an evidentiary hearing, the trial court denied the defendant's motion for new trial based upon jury misconduct. Id. EC and GSI argue that Sharpless demonstrates the necessity of an evidentiary hearing when proof is adduced that a juror improperly conducted research on the internet.
However, the Sharpless Court did not consider whether an evidentiary hearing on jury misconduct is mandatory or whether internet research constitutes an outside influence because neither party disputed these matters. See id. at 827-28. Rather, the Sharpless Court conducted an unchallenged hearing and considered only whether the internet research caused injury. Id. (citing TEX.R. CIV. P. 327(a); Golden Eagle Archery, 24 S.W.3d at 372). Finding none, the court concluded that the trial court did not abuse its discretion when it determined that Sharpless and Southwestern failed to discharge their burden under rule 327(a). See id. at 829. Sharpless is, thus, distinguishable from the present case and provides no support for EC and GSI's evidentiary hearing argument.
Moreover, while we agree with EC and GSI's basic contention that when an affidavit avers jury misconduct the trial court should grant an evidentiary hearing, in this case we have already concluded that the affidavits attached to EC and GSI's motion for new trial provided no evidence of an outside influence. See TEX.R. CIV. P. 327(a); King, 767 S.W.2d at 198-99 (concluding
Based on the above, the matters set out in the affidavits did not constitute improper outside influences warranting a new trial under Texas law. Because EC and GSI submitted no evidence tending to show juror misconduct, the trial court properly sustained PEI's objections to the affidavits, properly struck the affidavits, and properly denied EC and GSI's request for an evidentiary hearing. The trial court did not abuse its discretion in so concluding and, further, did not abuse its discretion in denying EC and GSI's motion for new trial on that basis. We overrule EC and GSI's first issue.
II. EVIDENTIARY CHALLENGES TO ADVERSE FINDINGS
By their second and third issues, EC and GSI challenge every adverse jury finding, most of which are challenges to the sufficiency of the evidence.
A. Standard of Review for Sufficiency Challenges
"When a party attacks the legal sufficiency of an adverse finding on an issue on which [it] has the burden of proof, [that party] must demonstrate on appeal that the evidence establishes, as a matter of law, all vital facts in support of the issue." Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex.2001) (per curiam). When an appellant attacks the legal sufficiency of an adverse finding on an issue for which it did not have the burden of proof, the appellant must demonstrate that there is no evidence to support the adverse finding. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex.2005); Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex.1983). Such a no-evidence challenge will be sustained only if: (1) there is a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or of evidence from
In reviewing a factual-sufficiency challenge to a jury finding on an issue on which the appellant had the burden of proof, the appellant must show that "the adverse finding is against the great weight and preponderance of the evidence." Dow Chem. Co., 46 S.W.3d at 242. In reviewing a factual-sufficiency challenge to a jury finding on an issue on which the appellant did not have the burden of proof, we consider and weigh all of the evidence and set aside the verdict only if the evidence that supports the jury finding is so weak as to make the verdict clearly wrong and manifestly unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986) (per curiam); Ins. Network of Tex. v. Kloesel, 266 S.W.3d 456, 469-70 (Tex.App.-Corpus Christi 2008, pet. denied); Bay, Inc. v. Ramos, 139 S.W.3d 322, 329 (Tex.App.-San Antonio 2004, pet. denied) (en banc). In either type of factual-sufficiency challenge, we must examine both the evidence supporting and that contrary to the judgment. See Dow Chem. Co., 46 S.W.3d at 242; Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex.1989). Additionally, the jury is the sole judge of witnesses' credibility, and it may choose to believe one witness over another; a reviewing court may not impose its own opinion to the contrary. See Golden Eagle Archery, 116 S.W.3d at 761.
B. EC and GSI's Claims Against PEI
By their second issue, EC and GSI argue that the evidence is legally insufficient to support the jury's adverse findings on the following issues: (1) breach of the License Agreement; (2) common law fraud; (3) statutory fraud; (4) an antitrust violation; and (5) theft of property, a service, or trade secrets.
1. Breach of the License Agreement
EC and GSI argue that the evidence is legally insufficient to support the jury's finding that PEI did not fail to comply with the License Agreement. They contend that there is undisputed and conclusive evidence that PEI breached the License Agreement in the following ways: (1) by failing to provide them with certain written information as required by Paragraph 8a of the Licensing Agreement; (2) by first agreeing to allow a monthly distribution of 225,000 copies into the U.S. and then unilaterally refusing to allow any more than 39,950 copies for monthly distribution; and (3) by not complying with its contractual obligation of good faith and fair dealing.
a. Internal Memoranda
EC and GSI assert that PEI breached the last sentence of Paragraph 8a of the License Agreement which states, "In the event Licensor does not approve any aspect of the Foreign Edition, Special Issues or Calendar, Licensor [PEI] will advise Licensee [ES and GSI] in what respect any such aspect is unacceptable." EC and GSI complain that PEI breached this provision because it did not provide them with certain written internal memoranda dated December 9, 1996, February 4, 1997, and February 7, 1997—memoranda from Hugh Hefner to Playboy executives expressing his general concerns about a Spanish edition of Playboy being distributed in the U.S.
Paragraph 8a, in its entirety, provides the following:
EC and GSI contend that, in addition to Paragraph 8a's required pre-publication, written approval of all aspects of each issue, through Paragraph 17 of the License Agreement, Licensor PEI was to provide written notice of its disapproval of any such aspect. Paragraph 17 provided that "[a]ll legal notices, consents, and other communications required by the terms of this agreement ... shall be in writing."
It is undisputed that Paragraph 8a provided for pre-publication, written approval of aspects of each issue or edition. Pursuant to Paragraph 8a, the specific aspects of distribution that required such approval included the cover price, any discounts for newsstand sales, and the subscription price. And, assuming without deciding that the last sentence of Paragraph 8a through Paragraph 17 required PEI to advise EC and GSI, in writing, of any unacceptable aspects, the question becomes, did the evidence establish that the Hugh Hefner written memoranda expressed disapproval of an aspect of the magazine covered by Paragraph 8a, such that PEI was required to provide those memos to EC and GSI.
Although the evidence established that Hugh Hefner expressed his concern about the development of a Spanish language version of Playboy to be distributed in the U.S. and that PEI did not provide either EC or GSI with Hefner's written memoranda that addressed his concerns, a reasonable jury could have concluded that the Hefner memoranda did not address any aspect of any issue of the Foreign Edition, Special Issues, or Calendar that was identified in Paragraph 8a. The jury could have rationally concluded that, through these memos, PEI was not disapproving or refusing to approve any specific Paragraph 8a aspect. Thus, a reasonable jury could have concluded that PEI was not required to advise EC and GSI of Hefner's concern by providing them with his memoranda. Rather, the evidence establishes that three issues of the magazine, the October, November, and December 1997 issues, were distributed in the U.S. This evidence supports a determination that PEI approved, for U.S. distribution, all Paragraph 8a aspects of the three issues, including the cover price, the discount for newsstand sale, and the subscription price. After so concluding, the jury could have reasonably determined that PEI did not fail to comply with the License Agreement in this regard. See City of Keller, 168 S.W.3d at 827.
b. Number of Copies for Distribution in the U.S.
As a second breach-of-contract theory, EC and GSI argue that PEI
EC and GSI assert that "[w]here, as here, a reasonable construction of this clause is that it allows the monthly distribution of a quantity higher than the actual sale[s] amount of 150,000 copies per month, this [t]rial [c]ourt should have declared that the contract was breached as a matter of law" because PEI approved only 39,950 copies per issue for distribution in the U.S. EC and GSI contend that although this provision may limit sales, it does not limit distribution and PEI should have allowed monthly distribution of more than 150,000 issues in order to accomplish an actual sale of 150,000 copies.
At EC and GSI's request, the trial court submitted the meaning of this provision to the jury through the following instruction in Question 1A: "The [c]ourt further instructs you that [this] term of the License Agreement is ambiguous, which means that it is susceptible to more than one meaning." It is clear, however, that the jury rejected EC and GSI's suggested construction and resolved ambiguity, if any, against EC and GSI when it found that PEI did not fail to comply with the License Agreement. By so finding, the jury impliedly concluded that this provision expressly allowed PEI to set U.S. sales and distribution figures at a number not to exceed 150,000 copies per month, and therefore, PEI did not breach that provision when it formally approved a monthly distribution in the U.S. of 39,950 copies. Thus, we are not persuaded by this argument, especially in light of the fact that the ambiguity instruction was submitted to the jury at EC and GSI's request. See Tittizer v. Union Gas Corp., 171 S.W.3d 857, 862 (Tex.2005) (per curiam) (explaining that a party cannot complain on appeal that the trial court took a specific action that the complaining party requested).
EC and GSI also contend that, under this theory of recovery, the evidence is legally insufficient to support this adverse finding as a matter of law. They assert that there is undisputed and conclusive evidence that establishes PEI agreed to allow monthly distribution of 225,000 copies of the Spanish language version of Playboy in the U.S. and breached the License Agreement when it only allowed the monthly distribution of 39,950 copies. In support of this argument, EC and GSI point to PEI's approval of the use of a media kit which identified a monthly distribution objective of 225,000 copies.
In support of their contention that the evidence conclusively establishes that PEI approved a 225,000 distribution figure, EC and GSI also reference testimony provided by Marco Sanchez, Paul Siegel, Randy Hills, and Fernando Peramo, all executives
Finally, the jury could have credited favorable testimony provided by Javier Sanchez, an experienced businessman who signed the License Agreement on behalf of EC, and disregarded contrary evidence, if any, that PEI approved the distribution of 225,000 copies. See Del Lago Partners, 307 S.W.3d at 770; City of Keller, 168 S.W.3d at 822, 827. Javier Sanchez testified that he read and understood the agreement; his lawyers also read the agreement and advised him concerning it; and he discussed the meaning of the agreement with PEI representatives. In addition, Javier Sanchez agreed that, going into the agreement, he understood that the distribution and sale of the Spanish-language version of the magazine in any country other than Mexico would be subject to PEI's prior written approval that could be withdrawn once given on notice from PEI and that such approval, if any, would not exceed 150,000 copies per issue—in other words, the maximum amount of copies per issue would be 150,000. The jury could have reasonably concluded that Javier Sanchez understood that the License Agreement set out a maximum of 150,000 copies per issue for sale and for distribution in the U.S. and that the understanding or agreement did not set the lower or actual limit that PEI would approve. And after so concluding, the jury could have reasonably determined that PEI did not fail to comply with the License Agreement in this regard. See City of Keller, 168 S.W.3d at 827.
c. Good Faith and Fair Dealing
As a third theory of recovery on their breach-of-contract claim, EC and GSI argue that PEI did not act in good faith and failed to cooperate or to deal fairly with them.
Under Illinois law, parties to a contract "are entitled to enforce the terms of a
Reviewing the evidence presented at trial in the light most favorable to the jury's verdict and indulging every reasonable inference that would support it, we conclude that the evidence is legally sufficient to support the jury's adverse finding on all three breach-of-contract theories of recovery set out above. See Del Lago Partners, Inc., 307 S.W.3d at 770; City of Keller, 168 S.W.3d at 822, 827. The evidence would enable reasonable and fair-minded people to reach the verdict under review. See City of Keller, 168 S.W.3d at 827.
EC and GSI also contend that the evidence is legally insufficient to support the jury's adverse fraud findings. They argue that the undisputed evidence conclusively established that PEI committed common law fraud and statutory fraud against them.
a. Common Law Fraud
The jury answered "No" to Question 2A, "Did [PEI] commit fraud against [EC or GSI]?" For this question, the trial court instructed the jury that fraud occurs when,
Based on this instruction, in order to recover on this common law fraud claim, EC and GSI had to establish not only failure to disclose, but also that they were ignorant of the undisclosed facts and did not have an equal opportunity to discover the truth, that PEI intended to induce them to take an action based on the non-disclosure, and that they suffered injury as a result of the non-disclosure. On appeal, EC and GSI have not challenged the jury finding with respect to all elements. Because we must affirm the take-nothing judgment on EC and GSI's common law fraud claim unless the evidence conclusively establishes all elements of the fraud claim and because EC and GSI, the parties that had the burden of proof, have not challenged the jury finding with respect to every element of that claim, their argument that the take-nothing judgment on their fraud claim must be reversed fails. See Dow Chem. Co., 46 S.W.3d at 241; Rich v. Olah, 274 S.W.3d 878, 886-88 (Tex. App.-Dallas 2008, no pet.).
b. Statutory Fraud
The jury also answered, "No," to the statutory fraud Questions 3A, 4A, and 5A, "Did [PEI] commit statutory fraud as defined [in the respective questions] against [EC and GSI]?" On appeal, EC and GSI assert that PEI committed statutory fraud because,
EC and GSI argue that PEI had a legal duty to disclose this information.
However, none of the statutory fraud jury questions involve non-disclosure. Question 3A asked about false representations of a past or existing material fact that was made to and relied on by EC or GSI in entering into a contract; Question 4A asked about a false material promise to do an act with the intent of not relying on it that was made to relied on by EC or GSI in entering into a contract; and Question 5A asked about PEI's actual awareness of the falsity of a promise made by another person, its failure to disclose that false representation or promise, and a benefit received from it. Thus, all three questions required EC and GSI to prove a false representation or promise. On appeal, their statutory fraud arguments do not identify any false representations or promises that PEI allegedly made. Furthermore, as with the common law fraud analysis, because we must affirm the take-nothing judgment on this statutory fraud claim unless the evidence conclusively establishes all elements of the claim and because EC and GSI have not challenged the jury finding with respect to all elements of that claim, their argument fails. See Dow Chem. Co., 46 S.W.3d at 241, Rich, 274 S.W.3d at 886-88.
4. Antitrust Violation
EC and GSI challenge the legal sufficiency of the evidence to support the jury's adverse antitrust finding that PEI did not engage in a contract, combination, or conspiracy in restraint of trade or commerce that harmed EC or GSI. More specifically, EC and GSI assert the following:
In support of this argument, EC and GSI rely on ten PEI memoranda that were admitted as trial exhibits. EC and GSI assert that "[t]hese documents evidence not only an agreement by and amongst employees of PEI, but also with Hugh Hefner, the majority stockholder of the entity, as well as persons outside the company." Without further citation to the reporter's record, EC and GSI contend that,
The following antitrust question was submitted: "Did [PEI] engage in a contract, combination, or conspiracy in restraint of trade or commerce that harmed [EC or GSI]?" See TEX. BUS. & COM.CODE ANN. § 15.05(a) (West 2011).
At the charge conference, PEI requested the following instruction, which read in relevant part as follows:
PEI correctly argued that the charge was defective because it submitted a claim for
"The Texas Free Enterprise and Antitrust Act [TFEAA] provides that "`every contract, combination, or conspiracy in restraint of trade is unlawful."'" Levinthal v. Kelsey-Seybold Clinic, P.A., 902 S.W.2d 508, 511 (Tex.App.-Houston [1st Dist.] 1994, no writ) (quoting TEX. BUS. & COM.CODE ANN. § 15.05(a)); see also Puentes v. Spohn Health Network, No. 13-08-00100-CV, 2009 WL 1974592, *4, 2009 Tex.App. LEXIS 4131, at *13 (Tex.App.-Corpus Christi June 11, 2009, pet. denied) (mem. op.). In order to establish a violation of section 15.05 of the TFEAA, EC and GSI were "required to prove a concerted action by two or more persons." Levinthal, 902 S.W.2d at 511 (citing Red Wing Shoe Co., Inc. v. Shearer's Inc., 769 S.W.2d 339, 344 (Tex.App.-Houston [1st Dist.] 1989, no writ)). "To show a concerted action by two or more persons to illegally restrain trade, a plaintiff faces the threshold requirement of identifying a co-conspirator." Levinthal, 902 S.W.2d at 511 (citing Red Wing Shoe Co., 769 S.W.2d at 345).
Moreover, "[a] company cannot conspire with its own employees as a matter of law." Red Wing Shoe Co., 769 S.W.2d at 345; see Jack Russell Terrier Network of N. Ca. v. Am. Kennel Club, Inc., 407 F.3d 1027, 1034-35 (9th Cir.2005) (explaining that under the federal act, co-conspirators must be "actual or potential competitors" and "separate entities pursuing different economic goals" with "divergent economic interests"); Arnold Pontiac-GMC, Inc. v. Gen. Motors Corp., 786 F.2d 564, 574 (3d Cir.1986) ("[T]here is no conspiracy or concerted action for the purpose of Section 1 of the Sherman Act when a corporation merely acts in concert with its own employees[.]"); Solomon v. Houston Corrugated Box Co., 526 F.2d 389, 396 (5th Cir.1976) ("it is well-settled that the Sherman Act's conspiracy or agreement requirement is not met by a `conspiracy' between a corporation and its corporate officer[.]"). And one cannot sustain an action under subsection 15.05(a) of the TFEAA regarding conspiracies or combinations in restraint of trade when he has not provided any evidence that the defendant engaged in any concerted action with any other independent entity. See Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 761-62, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984) (noting that in order to recover under the federal act, a plaintiff must assert concerted action between two or more entities); Red Wing Shoe Co., 769 S.W.2d at 345; see also Puentes, No. 13-08-00100-CV, 2009 WL 1974592, *4, 2009 Tex.App. LEXIS 4131, at *13 ("[A] violation of subsection 15.05(a) cannot be based on concerted action between a corporation and its wholly-owned subsidiary....").
Now, on appeal, because PEI objected to the charge as defective on the basis that it omitted a required element of an antitrust claim—that PEI entered into an agreement with another person—we measure the sufficiency of the evidence not by the charge but by the antitrust law set out above. See Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex.2000) (providing that when a complaining party has not alerted the trial court of an alleged defect by objecting to the court's charge, it is the charge, and not some other, unidentified law, against which we measure sufficiency of the evidence); see also Equistar Chem., L.P. v. Dresser-Rand Co., 240 S.W.3d 864, 868 (Tex.2007) (concluding that an argument that the charge submitted an improper measure of
Much of EC and GSI's antitrust argument focuses on various alleged internal plans of PEI. The memoranda referenced by EC and GSI discuss PEI's position regarding distribution of the Spanish edition of Playboy in the U.S., its evolving relationship with EC and GSI, and viable options that would allow for the continued publication of a Spanish language magazine. The memoranda, however, do not conclusively establish that PEI engaged in a contract, combination, or conspiracy in restraint of trade or commerce against EC and GSI with another person or business, as they assert. Rather, with only one exception, the referenced memoranda establish that PEI was reviewing the venture and was planning internally. An internal plan is not a contract, combination, or conspiracy with a separate and independent business or person, and evidence of an agreement between or among PEI's employees, agents, officers, directors, and/or stockholders does not conclusively establish the agreement element of an antitrust claim.
Additionally, although EC and GSI assert that the evidence establishes that there existed an agreement between PEI and other persons outside the company, our review of the record reveals that the only unaffiliated person with whom PEI communicated was Laura de Laviada, a Mexican business woman. Marks identified her as a possible successor to EC and GSI; however, there is nothing in the record that establishes PEI reached an agreement with her. Christie Hefner testified that while she might have communicated in writing with de Laviada about the matter, she did not think that she had met with her and agreed that she had never made a deal with her in Mexico. Instead, Christie Hefner testified that after the contract was terminated with EC and GSI, it took five years to find a new licensee to relaunch the publications in Mexico and the new licensee was not de Laviada.
Therefore, assuming without deciding that this is an antitrust claim and not just a claim for breach of contract as PEI urges,
5. Theft of Property, Service, or Trade Secrets
Based on the above analysis, we overrule EC and GSI's second issue challenging the jury's adverse findings on their claims against PEI.
B. PEI'S COUNTERCLAIMS
In their third issue, EC and GSI challenge all of the jury's findings on PEI's counterclaims.
1. Breach-of-Contract Counterclaims
EC and GSI first address the jury's findings in favor of PEI on its breach-of-contract counterclaims. Specifically, EC and GSI challenge the findings that they failed to comply with the agreements and that their failures to comply were not excused. They also appear to assert charge error when they argue that PEI failed to use or rely on Illinois law in their breach-of-contract jury questions.
a. Sufficiency of the Evidence to Establish Breach
EC and GSI challenge the sufficiency of the evidence to support the jury's findings that EC and GSI breached the License Agreement and the Renegotiated Payment Plan Agreement—issues for which EC and GSI did not have the burden of proof.
The License Agreement provided that the "failure of [EC] ... to make any payment
Based on our review of the evidence under the appropriate standard, the evidence is sufficient to support the jury's findings that EC and GSI breached the License Agreement and the Renegotiated Payment Plan Agreement. See City of Keller, 168 S.W.3d at 810; Croucher, 660 S.W.2d at 58. It is legally sufficient because there is not a complete absence of evidence, but rather more than a scintilla of evidence, properly admitted, to support the findings and because the evidence does not establish conclusively the opposite of such findings, as urged by EC and GSI. See City of Keller, 168 S.W.3d at 810; King Ranch, Inc., 118 S.W.3d at 751. Furthermore, we conclude that the evidence is factually sufficient because it is not so weak as to make the verdict clearly wrong and manifestly unjust. See Cain, 709 S.W.2d at 176; Ins. Network of Tex., 266 S.W.3d at 469-70; Bay, Inc., 139 S.W.3d at 329.
b. EC and GSI's Excuse Defense
EC and GSI also challenge the jury's refusal to find that their breaches were excused—an affirmative defense for which EC and GSI had the burden of proof.
c. Illinois Law
EC and GSI contend that PEI intentionally omitted any reference to Illinois law in their breach-of-contract jury questions and, thereby, eradicated any entitlement it had to the jury's affirmative findings of breach. EC and GSI did not, however,
d. Damage Award
Finally, EC and GSI argue that the evidence is insufficient to support the jury's awards of $312,500 and $48,750 in damages on PEI's breach-of-contract counterclaims. We are not persuaded by this argument because it is based on allegations which we have already concluded are not supported by the record—that the evidence demonstrates that neither EC nor GSI breached the agreements, that PEI submitted its breach of contract claim without reference to Illinois law, and that the evidence demonstrates that the breaches were legally excused. Therefore, we need not address this contention further. See TEX.R.APP. P. 47.1.
2. Fraud Counterclaims
EC and GSI also contend that all findings against them on PEI's fraud claims were not supported by sufficient evidence. However, PEI elected to recover not on its fraud claims but on its breach of contract claims which we have concluded are supported by the evidence. We decline to address appellant's second issue as it is not dispositive to this appeal. See id.
3. Attorneys' Fees
Finally, EC and GSI challenge the jury's award of attorneys' fees in the amount of $1,680,000 and $500,000 contingent appellate fees. They first argue that PEI is not entitled to recover attorneys' fees, asserting that Illinois law precludes such an award. Relying on Brundidge v. Glendale Fed. Bank and Hamer v. Kirk, EC and GSI acknowledge that Illinois law permits the recovery of attorneys' fees where an agreement between the parties allows the successful litigant to recover attorneys' fees and the expenses of suit. See Brundidge, 168 Ill.2d 235, 213 Ill.Dec. 563, 659 N.E.2d 909, 911 (1995); Hamer, 64 Ill.2d 434, 1 Ill.Dec. 336, 356 N.E.2d 524, 526 (1976). Here, the License Agreement expressly authorizes the recovery of attorneys' fees and litigation costs. Thus, this argument fails.
EC and GSI further argue that the award should be disregarded because PEI failed to introduce evidence of attorneys' fees incurred solely in connection with the prosecution of the breach of contract claims, and because PEI brought both tort claims and contract claims, this failure to segregate fees is fatal to any right to recover fees. See Varner v. Cardenas, 218 S.W.3d 68, 69 (Tex.2007). However, EC and GSI waived any objection to any failure to segregate by failing to object to the attorneys' fees jury question on the ground that PEI had not segregated its attorneys' fees. Where "[n]o objection [is] made based on the failure to segregate ... any error in failing to segregate the fees [is] waived, and the trial court [can] only disregard the jury finding if it [is] unsupported by the evidence or
Finally, EC and GSI also assert that the fees should be disregarded because the evidence conclusively demonstrated that neither EC nor GSI breached either the License Agreement or the Renegotiated Payment Plan Agreement and, if there was any breach, it was excused as a matter of law. We have already decided these evidentiary issues against EC and GSI and, therefore, need not address them as a basis for their attorneys' fees argument. See TEX.R.APP. P. 47.1.
Based on the above analysis, we overrule EC and GSI's third issue challenging the jury's findings in favor of PEI on PEI's counterclaims.
We affirm the judgment of the trial court.
- No Cases Found