                                                                            FILED
                           NOT FOR PUBLICATION                               APR 04 2011

                                                                         MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                        U .S. C O U R T OF APPE ALS




                            FOR THE NINTH CIRCUIT



ATLAS FLOORING, LLC, an Arizona                  No. 09-17036
limited liability company,                       No. 10-15512

       Plaintiff-counter-defendant –             D.C. No. 2:07-CV-01741-SRB
       Appellee,

  v.                                             MEMORANDUM *

PORCELANITE S.A. DE C.V., a foreign
corporation, DBA Grupo Porcelanite S.A.,

       Defendant-counter-claimant –
       Appellant.



                    Appeal from the United States District Court
                             for the District of Arizona
                     Susan R. Bolton, District Judge, Presiding

                     Argued and Submitted February 14, 2011
                            San Francisco, California

Before: O’SCANNLAIN and TROTT, Circuit Judges, and CAMPBELL,** District
Judge.



        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.

        **
              The Honorable Tena Campbell, Senior United States District Judge
for the District of Utah, sitting by designation.
      Following a jury verdict in this diversity action, the district court denied

Porcelanite’s renewed motions for judgment as a matter of law under Fed. R. Civ.

P. 50(b) and its motion for a new trial under Fed. R. Civ. P. 59(a). Porcelanite

appealed, and we affirm. Porcelanite also appealed the district court’s award of

attorneys’ fees and costs (see Consolidated Appeal No. 10-15512). But in its

opening brief Porcelanite did not present argument supporting that claim.

Consequently, Porcelanite waived that issue on appeal. Martinez-Serrano v. INS,

94 F.3d 1256, 1259 (9th Cir. 1996).

1.    Standard of Review

      We review the denial of a motion for judgment as a matter of law de novo,

and view the evidence in the light most favorable to Atlas. Lakeside-Scott v.

Multnomah Cnty., 556 F.3d 797, 802 (9th Cir. 2009) (“Judgment as a matter of law

is proper when the evidence permits only one reasonable conclusion and the

conclusion is contrary to that reached by the jury.”). We review for abuse of

discretion a district court’s denial of a motion for a new trial and must uphold a

jury verdict if it is supported by substantial evidence. Guy v. City of San Diego,

608 F.3d 582, 585 (9th Cir. 2010).




                                           2
2.    Liability

      a.     Breach of Contract

      Porcelanite challenges the factual basis for the jury’s verdict on Atlas’s

contract claims. At trial, each party presented conflicting testimony about their

understanding of the contract and their intentions. The jury chose to believe

witnesses whose testimony favored Atlas’s contract interpretation. This Court may

not second-guess the jury’s credibility findings or weighing of the evidence. Id. A

review of the record shows that the jury verdict on Atlas’s contract claims was

supported by substantial evidence. Id.; Lakeside-Scott, 556 F.3d at 802.

      b.     Fraud

      Porcelanite challenges the jury’s finding of intent to defraud. A review of

the record shows that sufficient evidence exists to support the jury’s finding that

Porcelanite intended to and did make fraudulent misrepresentations, so the Court

will not disturb the verdict on that basis. Guy, 608 F.3d at 585.

      Porcelanite also contends that Atlas did not present any evidence that

Porcelanite’s misrepresentation caused Atlas’s lost profit damages. Porcelanite

does not provide any authority to support its proposition that a victim of fraud is

prohibited from recovering lost profits even if a jury finds that the fraud victim’s

reliance on the misrepresentation caused damage. Viewing the evidence in a light


                                           3
most favorable to Atlas, the Court concludes that a reasonable jury could find that

Atlas relied on Porcelanite’s misrepresentations, which caused damage to Atlas.

Id.; Lakeside-Scott, 556 F.3d at 802-03. Accordingly, the jury’s fraud verdict is

valid.

         c.    Intentional Interference with Business Expectancies

         Porcelanite argues that Atlas did not have a valid business expectancy in its

dealings with Lowe’s and that Atlas failed to prove that any interference by

Porcelanite caused Atlas’s injuries. Reviewing the evidence in a light most

favorable to Atlas, the Court holds that there was sufficient evidence to support the

jury’s verdict that Atlas had a valid business expectancy, and that Porcelanite’s

actions interfered with that expectancy. Guy, 608 F.3d at 585; Lakeside-Scott, 556

F.3d at 802-03. See also Antwerp Diamond Exch. of Am., Inc. v. Better Bus.

Bureau of Maricopa Cnty., Inc., 637 P.2d 733, 740 (Ariz. 1981).

3.       Atlas’s Expert Witness on Damages

         Porcelanite challenges the admissibility of the testimony of Atlas’s damages

expert, Bradley Preber, under Daubert v. Merrell Dow Pharms., Inc., 43 F.3d 1311

(9th Cir. 1995). Porcelanite did not challenge Mr. Preber’s testimony on the basis

of his qualifications or the relevance of his opinions but on the basis that his

conclusions were unreliable because he used an unsound methodology. Mr.


                                            4
Preber, a CPA, used a professionally recognized method of calculating lost profits.

The district court correctly determined that Porcelanite’s complaints about Mr.

Preber’s testimony went to the weight, not the admissibility, of the expert

testimony. Stilwell v. Smith & Nephew, Inc., 482 F.3d 1187, 1192 (9th Cir. 1995).

The district court’s decision to admit the testimony of Mr. Preber was not an abuse

of discretion. Humetrix, Inc. v. Gemplus S.C.A., 268 F.3d 910, 919 (9th Cir.

2001).

         Additionally, contrary to Porcelanite’s argument, the district court did not

abuse its discretion when it allowed Mr. Preber to testify about his updated damage

calculations. Mr. Preber did not issue a new report. Rather, he updated his report

(using the same methodology) based on more current information reflecting

ongoing damages. This was not error. U-Haul Int’l, Inc. v. Lumbermens Mut.

Cas. Co., 576 F.3d 1040, 1043 (9th Cir. 2009).

4.       Damages

         In awarding damages, a jury has broad discretion in weighing the evidence,

and the Court is not to substitute its judgment for that of the jury. Del Monte

Dunes at Monterey, Ltd. v. City of Monterey, 95 F.3d 1422, 1435 (9th Cir. 1996).

“We must uphold the jury’s finding unless the amount is grossly excessive or




                                             5
monstrous, clearly not supported by the evidence, or based only on speculation or

guesswork.” Id.

      a.     Compensatory Damages

      Porcelanite challenges the jury’s compensatory damages award, arguing that

the award was based upon speculation, improperly provided double recovery, and

was impermissible under the economic loss doctrine.

             i.    Speculation

      Contrary to Porcelanite’s contention, the jury did not speculate when it

calculated the damages award. Under Arizona law, Atlas, the prevailing party,

showed the amount of its damages with reasonable certainty. Gilmore v. Cohen,

386 P.2d 81, 82 (Ariz. 1963). Atlas’s damages expert witness testified that the

conservative high end of Atlas’s total damages (for the liability theories combined)

was $30.7 million. The jury awarded $32.3 million. In addition to the expert

testimony (including his damage summary tables), the record contained other

evidence providing a reasonable basis for the slightly higher amount awarded by

the jury. The expert presented projections about future sales between the date of

his damage estimate and the time of trial, and Atlas introduced evidence that

Porcelanite continued making sales to Lowe’s after the damages period calculated

by the expert witness. This is not a situation where the award is “clearly not


                                          6
supported by the evidence.” Los Angeles Mem’l Coliseum Comm’n v. NFL, 791

F.2d 1356, 1360 (9th Cir. 1986). Accordingly, the Court upholds the

compensatory damages award.

             ii.    Double Recovery

      The Court finds that the jury did not award duplicate damages to Atlas. The

nature of the jury’s verdict does not suggest double recovery. The expert witness

testified about lost profits without relegating the damages to a particular theory of

liability. The jury allocated the total amount of damages to the different theories.

Atlas is not required to demonstrate how the jury reached the damages amount. It

is enough that a rationale for the jury’s division of the damages total can be derived

from the record. Atlantic & Gulf Stevedores, Inc. v. Ellerman Lines, Ltd., 369

U.S. 355, 365 (1962); Morissette v. United States, 342 U.S. 246, 276 (1952).

Furthermore, Porcelanite, in failing to poll the jury or attempt to resolve

ambiguities in the verdict before the jury was excused, cannot now use any

uncertainty or confusion to set aside the verdict.

             iii.   Economic Loss Doctrine

      The economic loss doctrine does not bar Atlas’s recovery of compensatory

tort damages. Arizona courts have applied the economic loss doctrine only to non-

intentional torts in the products liability and construction defects context. Flagstaff


                                           7
Affordable Housing Limited Partnership v. Design Alliance, Inc., 223 P.3d 664

(Ariz. 2010) (en banc). There is no logical connection between those contexts and

the exclusive distribution contract at issue here. Adopting Porcelanite’s position

would result in an impermissible expansion of Arizona law.

Ticknor v. Choice Hotels Int’l, Inc., 265 F.3d 931, 939 (9th Cir. 2001).

      b.     Punitive Damages

      Porcelanite contends that the $25 million punitive damages award was

unconstitutional because it was grossly excessive. Southern Union Co. v. Irvin,

563 F.3d 788, 791 (9th Cir. 2009). When considering the constitutionality of a

punitive damage award, the Court considers the degree of reprehensibility of the

sanctioned party’s actions, the disparity between the actual and punitive damage

awards, and the difference between the punitive damage award and comparable

civil penalties.1 State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 418

(2003).

      Porcelanite consciously disregarded Atlas’s interests and rights. Although

no physical harm occurred, Porcelanite’s selfish conduct was motivated by greed

and resulted in profits for Porcelanite at Atlas’s expense. Porcelanite consciously



      1
      This third factor is not applicable here because the parties did not present
comparable civil penalties. Porcelanite’s cite to criminal penalties is not relevant.

                                           8
and repeatedly concealed its actions and made millions of dollars from its sales to

Lowe’s.2 The “infliction of economic injury, especially when done intentionally

through affirmative acts of misconduct . . . can warrant a substantial penalty.”

BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 576 (1996).

          The disparity between the actual and punitive damage amounts is not

significant. The jury’s punitive damages award was approximately 1.5 times

Atlas’s tort damages. This is below the ratios this Court has approved as

constitutional. See, e.g., Southern Union, 563 F.3d at 792; Planned Parenthood of

the Columbia/Willamette, Inc. v. Am. Coalition of Life Activists, 422 F.3d 949,

962 (9th Cir. 2005); Zhang v. Am. Gen. Seafoods, Inc., 339 F.3d 1020, 1044 (9th

Cir. 2003).

          For the foregoing reasons, this Court concludes that the punitive damages

award was not grossly excessive and did not violate Porcelanite’s due process

rights.




          2
        Porcelanite argues that it acted on the honest belief that Lowe’s would no
longer stock Atlas’s products. Porcelanite further argues that the district court
erred in excluding from evidence an e-mail from Lowe’s to that effect. Assuming,
without deciding, that the e-mail should have been admitted as evidence, the
content and weight of that lone e-mail is not enough to tip the already heavily-
weighted scale in Porcelanite’s favor.

                                            9
      In sum, there is no basis to disturb the jury’s determination of Atlas’s

compensatory or punitive damages.

AFFIRMED.




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