ING Global v. United Parcel Service Oasis Supply Corp.

Citations: 757 F.3d 92; 2014 WL 2922656Docket: No. 13-489-cv

Court: Court of Appeals for the Second Circuit; June 30, 2014; Federal Appellate Court

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In October 2012, a jury ruled in favor of ING Global in a breach of contract case against United Parcel Service (UPS), awarding attorney’s fees to ING under Georgia law. UPS did not request judgment as a matter of law before the jury's decision but later sought to amend the judgment regarding attorney’s fees or to have a new trial on that issue. The district court determined that the jury's verdict lacked legal support and set aside the attorney’s fees award, which UPS did not contest. However, the appellate court found that UPS's failure to file a timely motion under Rule 50(a) and the presence of evidentiary support for the jury's verdict meant the district court made an error in nullifying the fee award. The appellate court concluded that a new trial was unnecessary and reversed the district court's order, directing it to reinstate the jury’s verdict and address ING's motion for attorney’s fees.

The background indicates that ING provided Reusable Network Containers (RNCs) to UPS, which had awarded ING a contract to supply an estimated 1.2 million RNCs over three years. Despite existing contractual obligations, UPS sought additional RNCs from other suppliers, leading ING to sue for breach of contract and bad faith. The jury instructions clarified that bad faith referred to UPS's actions prior to the lawsuit, indicating a denial of liability was frivolous and unfounded. A finding of bad faith would mandate awarding attorney’s fees to ING, whereas reasonable grounds for contesting the claim would negate such an award.

UPS filed a motion in limine to exclude evidence of bad faith and attorney’s fees, claiming it had a reasonable basis to contest ING’s claims. This motion was denied, and ING was allowed to present evidence of bad faith at trial, primarily based on conflicting emails and UPS's denials regarding contractual obligations to purchase additional RNCs from ING. Both parties submitted proposed jury instructions defining bad faith; however, ING objected to including UPS's “reasonable ground” defense, which the district court overruled. The court adopted UPS's instruction with minor changes and presented it to the jury.

UPS did not contest the sufficiency of ING’s evidence of bad faith or move for judgment as a matter of law regarding the attorney’s fees. The jury ruled in favor of ING, awarding approximately $1.7 million for breach of contract and determining that UPS acted in bad faith, thus entitling ING to attorney’s fees. After the verdict, ING sought to set the attorney’s fees amount while UPS cross-moved to set aside the fees award or for a new trial, arguing that the verdict was against the evidence weight. UPS introduced new arguments regarding the court's charge on bad faith, claiming that Georgia law recognizes two distinct theories of bad faith: "frivolous and unfounded denial of liability" and "sinister motive." UPS asserted that a party with a reasonable defense cannot be found to have acted in bad faith.

Despite UPS's arguments, the district court affirmed that the "frivolous and unfounded denial" theory did not apply in this case and found that UPS had reasonable defenses. The court analyzed the case under the "sinister motive" theory and concluded that ING's claim could not succeed. Ultimately, viewing UPS's cross-motion as effectively a Rule 50(b) motion for judgment as a matter of law, the court deemed the jury's fees award "clearly erroneous" and set it aside to prevent manifest injustice. The court concluded a new trial would not favor ING and granted UPS judgment as a matter of law on the attorney’s fees issue. An appeal followed.

Rule 59(e) permits district courts to alter or amend judgments primarily to correct clear errors of law or prevent manifest injustice, allowing a wide range of motions. However, it does not allow a party to seek a judgment as a matter of law after failing to adhere to the procedural requirements of Rules 50 and 51. UPS's motion sought to set aside the jury's verdict on attorney's fees and enter judgment in its favor, which was effectively a request for judgment as a matter of law under Rule 50. This is significant because Rule 50 is designed to inform the opposing party about challenges to evidence and allow for additional evidence presentation, while Rule 51 requires pre-delivery articulation of objections to jury instructions. Granting UPS relief under Rule 59(e) without compliance with these rules would undermine their foundational role in federal trials. Consequently, UPS's motion will be treated as one for judgment as a matter of law under Rule 50, warranting a de novo review of the district court's decision. UPS's alternative request for a new trial will be reviewed under the abuse of discretion standard typically applied to such motions.

A motion for judgment as a matter of law under Rule 50(a) must be made before the jury is instructed, with a renewal under Rule 50(b) following the verdict. Failing to file under Rule 50(a) raises the standard for Rule 50(b) motions, which may only succeed to avoid manifest injustice—defined as a jury verdict completely unsupported by law. Courts must evaluate motions by viewing evidence favorably for the non-moving party, without weighing evidence or judging witness credibility. A motion for a new trial under Rule 59(a) also requires deference to jury verdicts, which should be overturned infrequently. 

In the case at hand, UPS did not object to jury instructions on bad faith that mirrored its own submissions, which accurately reflected Georgia law and included the "reasonable ground" defense. UPS failed to preserve its argument regarding reasonable grounds by not moving under Rule 50(a) or objecting under Rule 51, thereby waiving this argument unless manifest injustice is shown. The jury instructions were deemed legally supported, as the jury correctly rejected UPS's evidence regarding reasonable grounds. The contracts specified new RNC purchases at identified pricing, and internal communications from UPS indicated awareness of these contracts, while contradictory positions taken in emails suggested the jury had grounds to disbelieve UPS’s claims.

A jury could reasonably conclude that UPS acted in bad faith based on the evidence presented, despite UPS's claims to the contrary. The jury was instructed that bad faith involved a "frivolous and unfounded denial of liability," a definition supported by Georgia law. UPS's arguments regarding a specialized definition of "denial of liability" were forfeited due to their failure to raise these points in a timely manner. The court found no meaningful distinction between UPS's actions and a denial of liability, affirming the jury's understanding of the case. 

UPS's alternative motion for a new trial under Rule 59(a) claimed the verdict was against the weight of the evidence, but such a claim only holds if the verdict is seriously erroneous or a miscarriage of justice. The court emphasized a high degree of deference to jury credibility assessments and indicated that jury verdicts should rarely be overturned. In this case, the jury's finding of bad faith, based on witness credibility, was deemed appropriate. The court found no grounds to classify the verdict as egregious or erroneous.

The court reversed the district court's decision to set aside the jury’s award of attorney’s fees and remanded the case for reinstatement of the jury’s verdict and resolution of ING’s motion for attorney's fees. UPS had previously made a pretrial objection related to jury instructions but did not adequately address the issue earlier, which limited their ability to comply with Rule 50.