Alaska SC says company looking to make outdoors smartphone entitled to nominal damages

By Jessica Karmasek | Apr 17, 2017

ANCHORAGE, Alaska (Legal Newsline) - The Alaska Supreme Court has partially reversed a ruling in a lawsuit brought by a state-based company alleging a potential partner company intentionally delayed its smartphone project and then shared confidential information.

The state’s high court, in a March 24 opinion, concluded the state’s Third District Superior Court erred in granting defendant Trimble Navigation Limited a judgment notwithstanding the verdict.

A judgment notwithstanding the verdict, sometimes referred to as JNOV, is a practice in which a presiding judge in a civil jury trial may overrule the decision of a jury and reverse or amend its verdict.

The superior court, in this case, also concluded that plaintiff Recreational Data Services Inc., or RDS, failed to prove any amount of lost profits to a “reasonable certainty.”

RDS, an Alaska-based company that tried to develop and market a smartphone that would come preloaded with outdoor-oriented software, appealed the lower court’s decision to the state Supreme Court.

Justice Peter J. Maassen, writing for the high court, said it was an error to grant California-based Trimble JNOV because a reasonable juror could conclude that RDS proved “all elements of its claims.”

But Maassen said the lower court was correct in concluding that RDS failed to prove any amount of lost profits to a reasonable certainty.

The high court, in turn, granted remittitur, directing the superior court to make an award of nominal damages and enter judgment for RDS.

“Although we conclude that the evidence was sufficient to allow a reasonable juror to find that RDS proved the elements of its causes of action by a preponderance of the evidence, we must also conclude that the superior court was correct to find the evidence insufficient to show lost profits to a reasonable certainty,” Maassen explained in the 38-page opinion. “The jury was instructed that reasonable certainty meant it could ‘not award damages to RDS on the basis of speculation, guess, or conjecture.’ But there was nothing else on which the jury could base a lost-profits award in this case.”

RDS had pursued a partnership to advance its smartphone project with Trimble, through one of its divisions, Trimble Mobile Computing Services, and Remington Arms Company.

Remington withdrew from the project after about two years of research and review.

Months later, Trimble Mobile left the project, too -- shortly before a different Trimble division, Trimble Outdoors, launched a similar product.

RDS sued Trimble for misrepresentation, breach of contract and breach of fiduciary duty, alleging Trimble Mobile intentionally delayed RDS’ project while sharing confidential information about it with Trimble Outdoors.

A jury agreed with RDS and awarded it $51.3 million in lost profits.

Judge Catherine Easter essentially reversed the jury’s finding in granting Trimble JNOV.

RDS, on appeal, argued the superior court erroneously conflated the standards of proof for the fact of harm and the amount of damages, and asked that the jury verdict be reinstated.

Trimble, in response, argued no reasonable jury could have found that RDS satisfied all elements of its claims.

In its opinion, the Supreme Court explained that, when it came to the amount of damages, RDS did not present any expert testimony, economic and financial data, market surveys and analyses, or business records of similar enterprises at trial.

Instead, it relied on the profit and loss statements generated from the Remington market research data following a September 2009 meeting and a valuation sketched out on a whiteboard by a Trimble Mobile employee at a December 2010 meeting after Remington had announced its withdrawal from the project.

“The project also generated market surveys, but RDS did not use these to support its statistical projections; nor did it present evidence that its projections were corroborated by the experience of similar businesses,” Maassen explained. “The jury appeared to base its verdict on the ‘whiteboard’ numbers, which valued the project at $38.5 million assuming a ‘75 percent revenue goal’; extrapolating from this number to 100 percent of the project’s revenue goals results in $51.3 million, the amount of the jury’s verdict.”

The justice continued, “Here, even assuming that a juror concluded that both parties believed the financial statements were realistic when they were created, RDS did not present sufficient evidence that the statements actually were realistic.

“They were calculated using research based on Remington’s customer base; with Remington gone, they provided at most a rough estimate for the phone’s success, without accounting for how new partners, a new marketing strategy, and a new customer base might affect the project’s actual profits.”

However, because RDS proved it was damaged, the Supreme Court agreed the company was entitled to an award of nominal damages.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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