Tuesday, April 29, 2014

The Difference Between New Trial and JNOV

Grail Semiconductor, Inc. v. Mitsubishi Electric & Electronics, Inc., No. H038714 (D6 Apr. 22, 2014)

This is some heavy-duty litigation over Mitsubishi’s alleged disclosure of memory chip technology in violation of an NDA with plaintiff, the technology’s inventor. A jury awarded plaintiff almost $124 million. The trial court, however, ordered a new trial on damages, ruling that the jury had used an erroneous measure that assumed plaintiff lost the entire value of the technology due to the disclosure, even though the evidence showed that plaintiff still had the ability to profit from the technology after the breach. In this appeal, Mitsubishi argues that on damages, the trial court should have granted it a JNOV—not just a new trial—and that the court should also have granted a new trial on liability due to improperly admitted evidence.

The court of appeal affirms on both issues. As to the new trial vs. JNOV, the court explains the distinction: If there isn't substantial evidence to support a damages award at all, JNOV is appropriate. But if, upon the admission of substantial evidence, the trial court believes that the jury’s damages award was based on a factually or legally erroneous measure, the remedy is a new trial. Only a new trial motion permits the court to second guess the jury like that. Here, there was more than adequate evidence that the plaintiff was damaged, so a new trial was the appropriate remedy.

The evidence issue concerns the admission of two documents that arguably established that a joint venture in which Mitsubishi was a partner actually used plaintiff’s technology, in violation of the NDA. The JV employee through whom the records came in testified that they had the “look and feel” of the JV’s marketing documents. And one document contained the URL of the JV’s website. But the witness was not custodian of the documents or the websites and did not have any personal knowledge regarding their creation, maintenance or accuracy. 

As the court explains, however, foundational evidence on business records and authenticity does not need to be presented by a person who created the document. The witness’s general testimony, when corroborated by the URL, was sufficient foundation to warrant its admission as a business record. Or at least the superior court did not abuse its discretion in so deciding. 

Further, Mitsubishi did not establish that it was prejudiced, as required under article VI, § 13, of the California Constitution, § 475 of the Code of Civil Procedure, or § 353 of the Evidence Code, in order to merit reversal. Each of these requires an appellant to show prejudice or a miscarriage of justice—which the cases define as a reasonable probability of a different result—before a court can reverse based on erroneously admitted evidence. Given that there was adequate other evidence that plaintiff’s confidential information had been used, and that Mitsubishi was afforded the opportunity to rebut the significance of these documents, the trial court did not err in holding that there was insufficient prejudice to warrant a new trial, even if the evidence was admitted in error.


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