                                                                                                                           Opinions of the United
2002 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


2-5-2002

Epcon Group Inc v. Danburry Farms Inc
Precedential or Non-Precedential:

Docket 0-3283




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Recommended Citation
"Epcon Group Inc v. Danburry Farms Inc" (2002). 2002 Decisions. Paper 91.
http://digitalcommons.law.villanova.edu/thirdcircuit_2002/91


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                                                 NOT PRECEDENTIAL

                   UNITED STATES COURT OF APPEALS
                       FOR THE THIRD CIRCUIT
                                ____

                            No. 00-3283
                                ____

                  EPCON GROUP, INC.; EPMARK, INC.

                                 v.

             DANBURRY FARMS, INC.; DANBURRY FARMS, L.P.;
            CAMBRIDGE MANOR, INC.; BARRINGTON MANOR, INC.;
           RICHARD E. HARTUNG; ASHFORD DEVELOPMENT COMPANY;
            ASHFORD REALTY COMPANY; ASHFORD REALTY, INC.;
              A.M.F. MANAGEMENT, INC.; JOHN DOES (1-10);
            JOHN DOES, INC. (1-10); CAMBRIDGE MANOR, L.P.;
            BARRINGTON MANOR, L.P.; QUADPLEX PARTNERS ONE;
         D.B. DEVELOPMENT, INC.; FRANK TOMINAC; LOUIS MOLNAR

Cambridge Manor, Inc.; Richard E. Hartung; Ashford Development Company,
                                             Appellants
                              ____

          On Appeal from the United States District Court
              for the Western District of Pennsylvania
                      (D.C. Civ. No. 96-1236)
            District Judge: Honorable Gary L. Lancaster
                                ____

                      Argued January 16, 2002

    BEFORE: SCIRICA, GREENBERG, and BRIGHT,      Circuit Judges

                     (Filed: February 5, 2002)

                                  Frederick N. Egler, Jr.
                                  Egler, Garrett & Egler
                                  428 Forbes Avenue
                                  2100 Lawyers Building
                                  Pittsburgh, PA 15219

                                  Michael G. Long (Argued)
                                  Kimberly W. Herlihy
                                  Vorys, Sater, Seymour & Pease
                                  52 East Gay Street
                                  Columbus, OH 43216

                                          Attorneys for Appellees, Epmark
Group,
                                          Inc. and Epmark, Inc.
                                Lawrence G. Zurawsky (Argued)
                                Zurawsky & Associates
                                600 Allegheny Building
                                Pittsburgh, PA 15219

                                Lee R. Golden
                                P.O. Box 8162
                                Pittsburgh, PA    15217

                                       Attorneys for Appellants

                                Roger G. Rulong
                                Vollmer, Rulong & Associates, P.C.
                                Grant Building
                                Suite 1212
                                Pittsburgh, PA 15219

                                       Attorney for Appellee, Frank
Tominac

                              ____

                MEMORANDUM OPINION OF THE COURT
                              ____

GREENBERG, Circuit Judge.
       This matter comes on before the court on appeal from an order of the
district
court entering judgment in favor of plaintiffs and against defendants on
February 24,
2000, and from an order of the district court entered February 29, 2000,
denying the
defendants' motion for a new trial or for judgment as a matter of law.
For the reasons set
forth below, we will affirm.
              I. BACKGROUND AND PROCEDURAL HISTORY
       In 1986, Edward Bacome and Philip Fankhauser, the principals of the
Epcon
Group, Inc. and Epmark, Inc. (collectively "Epcon"), Ohio corporations,
began designing
architectural plans for ranch-style four-plex condominiums. In the late
1980's, Epcon
developed several projects in Ohio based on their plans, including
projects known as Deer
Run, Greystone Manor, Bayberry and Trotters Chase. Epcon then licensed
its
development system, including its architectural plans, to third-party real
estate
developers.
       On May 18, 1989, Epcon entered into a licensing agreement with
Ashford
Development Company, signed on behalf of Ashford by its vice president,
Richard E.
Hartung, for Ashford's use of Epcon's architectural designs, confidential
information and
copyright written material in a development called Ashford Manor located
in Cranberry
Township, Pennsylvania. See supp. app. at 41a-42a; Appellants' Br. at 6.
Then, in 1992,
without a license agreement, Hartung used Epcon's plans to develop a
second project
called Cambridge Manor in Springdale Township, Pennsylvania. See supp.
app. at 59a,
62a. When Epcon discovered that its plans were used in the latter
project, it sued a
number of defendants including appellants Richard E. Hartung, Cambridge
Manor, Inc.
and Ashford Development Company (collectively "Hartung").
       Epcon filed its complaint in July 1996 in the district court
alleging, inter alia, that
Hartung infringed Epcon's copyright in violation of 17 U.S.C.    101, et
seq. (the
"Copyright Act"), and misappropriated its trade secrets. Following a
trial in February
2000, the jury on February 11, 2000, returned a verdict in Epcon's favor,
awarding it
$114,735.15 in compensatory and $68,571.00 in punitive damages. The court
entered
judgment on the verdict on February 24, 2000, and on February 29, 2000,
denied
Hartung's motion for a new trial or judgment as a matter of law under Fed.
R. Civ. P. 50
and 59. Hartung then timely appealed.
                         II. DISCUSSION
       Hartung first asserts that the district court erroneously held that
Epcon did not
publish its drawings - a critical point for if it had, it might have lost
its copyright
protection. See 17 U.S.C.     405. He argues that the district court,
finding that the
evidence showed that Epcon only submitted material to the appropriate
municipal
agencies, ignored evidence that Epcon's drawings were distributed to
"prospective
contractors, banks and lending institutions, potential home buyers, and
potential
licensees." See Appellants' Br. at 5, 8 and 15. He further asserts that
Epcon submitted its
drawings to the Columbus, Ohio, City Council for the Deer Run project in
1986 without a
copyright notice. See id. at 7-8. Thus, Hartung contends that because
distribution
occurred before 1988, see 17 U.S.C.    405(b), and because not all copies
of Epcon's plans
bore copyright notices, the district court erred in finding that Epcon did
not publish its
work.
      However, Hartung does not cite case law to support his assertion
that distribution
limited to necessary third parties, such as subcontractors or lending
institutions,
constitutes publication. See Kunycia v. Melville Realty Co., 755 F. Supp.
566, 574
(S.D.N.Y. 1990) (stating that distribution "to those persons without whose
participation
the plans could not be given practical effect," including contractors,
landlords and
building authorities, was not publication). Moreover, at the close of the
evidence,
Hartung admitted that the only evidence of publication was Epcon's
distribution of its
drawings to government agencies. See app. at 63a, 65a, 66a and 67a. Such
"judicial
admissions are binding for the purpose of the case in which the admissions
are made
including appeals." Glick v. White Motor Co., 458 F.2d 1287, 1291 (3d
Cir. 1972).
Relying on the representations of Hartung's counsel, the district court
found that "[t]he
only evidence of distribution contained in the record of this case
indicates that plaintiffs
have submitted copies of the plans to the appropriate governmental
authorities for
purposes of obtaining the required building permits. No further evidence
of further
distribution to the general public has been introduced." Supp. app. at
69a-70a.
Accordingly, we reject Hartung's publication argument.
      Hartung next contends that the district court erred in not setting
aside the jury's
award of punitive damages, asserting that the jury improperly may have
based its award
on Epcon's copyright infringement claim rather than the misappropriation
of trade secrets
claim. Despite his assertion, Hartung recognizes that the district court
instructed the jury
that it properly could award punitive damages only if it found liability
with respect to
Epcon's trade secrets claim and could not award punitive damages on its
copyright claim.
See Appellants' Br. at 9. Nonetheless, he argues that the instructions
and verdict slip
"make it impossible to determine the basis for the jury's awarding
punitive damages in
the amount of $68,571 and further impossible to determine whether any
portion thereof
arose from a finding of liability on the copyright infringement claim."
Id. at 9. Hartung's
contention is entirely without merit.
      Hartung neither objected to the jury instructions nor to the form of
the verdict
slip. See Appellants' Br. at 9. See also Fashauer v. New Jersey Transit
Rail Operations,
Inc., 57 F.3d 1269, 1288-89 (3d Cir. 1995) (describing procedure for
preserving objection
to jury charge); Fed. R. Civ. P. 51 (stating that "a party may not assign
as error defects in
jury instructions unless the party distinctly stated its objection before
the jury retired to
consider its verdict"). Instead, he cites BMW of North America, Inc. v.
Gore, 517 U.S.
559, 116 S.Ct. 1589 (1996), and Shiner v. Moriarty, 706 A.2d 1228 (Pa.
Super. Ct. 1998),
arguing that it is "impossible to determine that none of the punitive
damages were
awarded as a result of the finding of liability for copyright
infringement." Appellants' Br.
at 19.
       BMW of North America, however, stands for the proposition that the
due
process clause of the Fourteenth Amendment is violated when a punitive
damage award is
"grossly excessive" in relation to a state's legitimate interests in
punishing unlawful
conduct and deterring its repetition. See 517 U.S. at 568, 116 S.Ct. at
1595 (reversing
$2,000,000.00 punitive damages award where actual harm to plaintiff was
$4,000.00).
Accordingly, BMW of North America addresses an issue distinct from that
here.
Moreover, the jury awarded Epcon $114,735.15 in compensatory damages and
$68,571.00 in punitive damages and thus is not a case where the
relationship of the actual
harm to the award of punitive damages is so disproportionate as to shock
this court's
"constitutional sensibilities." Shiner, 706 A.2d at 1242 (citation
omitted). Consequently,
BMW of North America does not aid Hartung even on the point it addressed.
       Likewise, Shiner does not help Hartung. In Shiner, the jury awarded
punitive
damages after finding for the plaintiffs on all three counts of their
complaint. See 706
A.2d at 1234. However, on appeal, the Superior Court of Pennsylvania
determined that
the defendants' motion for judgment notwithstanding the verdict should
have been
granted as to two of the three claims. The court recognized that the
jury's award of
punitive damages had been made collectively on the basis of all three
theories of
recovery, without regard to each specific claim. See id. at 1242. Thus,
the jury could
properly assess damages only on the sole remaining claim, leading the
court to hold that
inasmuch as it was not possible to determine from the verdict slip which
portion of the
damages was attributable to that claim, a new trial on damages was
required.
      In contrast, in this case the jury returned a verdict in Epcon's
favor on both its
copyright claim and on its misappropriation of trade secrets claim. Both
the jury
instructions and the verdict slip made it clear that the award of punitive
damages only
related to the trade secrets misappropriation claim. The court stated:
"you may not award
punitive damages with respect to plaintiffs' copyright claim; you may only
consider
punitive damages in connection with plaintiffs' claim for misappropriation
of trade
secrets." App. at 23a. The verdict slip also linked punitive damages
only to the trade
secrets claim: "Question four: The jury, having found in favor of the
plaintiff and against
defendant Richard E. Hartung on the misappropriation of trade secrets
claim, awards
plaintiffs punitive damages in the amount of $68,571." App. at 25a.
Regardless of
whether the verdict slip linked Epcon's claims as to the award of
compensatory damages,
the instructions and the verdict slip are both clear and unambiguous with
regard to
punitive damages. They do not misstate the law and would not mislead a
jury, who is
assumed understand and follow the court's instructions. See, e.g.,
Loughman v. Consol-
Pennsylvania Coal Co., 6 F.3d 88, 105 (3d Cir. 1993) (citations omitted).
Accordingly,
the judgment of February 24, 2000, and the order of February 29, 2000 will
be affirmed.
                              ____
TO THE CLERK:
      Please file the foregoing memorandum opinion.

                               /s/Morton I. Greenberg
                                            Circuit Judge
