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Embotteladora Electropura S.A. de C.V. v. Accutek Packaging Equipment Co., Inc.

United States District Court, S.D. California

July 24, 2019

EMBOTELLADORA ELECTROPURA S.A. de C.V., an El Salvador corporation, Plaintiff,
v.
ACCUTEK PACKAGING EQUIPMENT COMPANY, INC., a California corporation; and DOES 1 through 25, inclusive, Defendant.

          ORDER: 1) DENYING DEFENDANT'S MOTION FOR JUDGMENT AS A MATTER OF LAW 2) GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR NEW TRIAL 3) STRIKING THE DECLARATIONS OF TODD PETERS AND OMOTUNDE OGUNGBE [ECF NOS. 111 & 130]

          Hon. Gonzalo P. Curiel United States District Judge.

         Presently before the Court are two motions filed by Defendant Accutek Packaging Equipment Company, Inc. (“Accutek”): Motion for Judgment as Matter of Law under Federal Rule of Civil Procedure (“Rule”) 50(b), filed on November 5, 2018, and Motion for New Trial, filed on December 9, 2018. ECF No. 111 and 130. Both motions have been fully briefed. On April 25, 2019, the Court took both motions under submission. ECF No. 140. Upon consideration of the moving papers and the applicable law, and for the reasons set forth below, the Court DENIES Defendant's Motion for Judgment as Matter of Law and GRANTS in part Defendant's Motion for New Trial.

         BACKGROUND

         A. Procedural Background

         This case concerns the sale of an allegedly defective Biner Ellison water bottling machine (the “Monoblock”) by Defendant Accutek to Plaintiff Electropura. Defendant Accutek is a developer and manufacturer of complete packaging solutions, and offers a wide variety of filling machines, capping machines, labeling machines, and complete packaging systems. Dkt. No. 30-1 at 2. Electropura is a bottled water company with water bottling facilities in El Salvador. Id.

         Due to the Monoblock's alleged deficiencies and defects, Electropura brought seven claims against Accutek: (1) fraudulent misrepresentation and conspiracy to defraud; (2) fraudulent concealment and conspiracy to defraud; (3) negligent misrepresentation; (4) breach of written contract; (5) breach of express warranty; (6) breach of implied warranty; and (7) restitution and unjust enrichment.

         At the close of discovery, Accutek moved for partial summary judgment to enforce the limitation on liability provision contained within the purchase agreement executed with Electropura. Upon consideration of the moving papers, the Court decided that the limitation on liability provision was enforceable and limited damages to no more than the purchase price of the equipment unless Plaintiff was found liable for fraud or misrepresentation.

         The Court conducted a seven-day trial from October 28 to November 7, 2018. At the close of Electropura's case-in-chief on November 5, Accutek moved orally for judgment as a matter of law pursuant to Rule 50(a) on the basis that Electropura's fraud claims fail as a matter of law and that the lack of fraud required dismissal of Electropura's unjust enrichment cause of action. ECF No. 111. The Court requested that the motion be briefed in writing and deferred ruling on the motion until after the completion of jury deliberations and the issuance of the jury's special verdicts. That same day, Accutek filed a written Motion for Judgment as a Matter of Law as to the fraud causes of action (first, second and third) and the unjust enrichment cause of action (seventh). ECF No. 111.

         On November 9, 2018, the jury returned a verdict in favor of Electropura on the first cause of action for intentional misrepresentation and in favor of Accutek on all other claims. As a result of the jury's special verdict on Electropura's claim for intentional misrepresentation, the jury awarded Electropura nothing for “lost past earnings, ” $72, 000 for “lost past profits, ” and $210, 825.00 for “other past loss” for a total of $282, 285 in compensatory damages. ECF No. 118, pg. 3. After the jury verdict in favor of Electropura, a punitive damages phase of trial was held and, following deliberations, the jury awarded Electropura an additional $525, 000 in punitive damages. There was no motion for judgement as a matter of law made as to the punitive damages claim.

         On December 9, 2018, Accutek moved for a new trial on the grounds that (1) Electropura's claim of intentional misrepresentation failed as a matter of law; and (2) that Electropura failed to present sufficient evidence to justify the jury's punitive damages award. ECF No. 130. Electropura filed an opposition to the motion on December 26, 2018. ECF No. 134. Accutek's reply followed on January 4, 2019. ECF No. 135. In adherence with this Court's briefing schedule, ECF No. 125, Electropura also filed an opposition to the motion for judgment as a matter of law on December 3, 2018. ECF No. 126. Accutek filed a reply on December 5, 2018. ECF No. 129.

         B. Factual Background [[1]]

         Orlando Perla, the head of production for Electropura, testified at trial regarding, among other things, the history of Electropura, its use and satisfaction with a Biner Ellison bottling machine purchased in 2005 and the decision to buy a new bottling machine to grow the Electropura business. Trial Tr. at 4-7 (Oct. 29, 2018). In the fall of 2012, Orlando Perla researched machines by country of origin and capabilities and decided on purchasing an American-made machine with the capacity of bottling 8-9, 000 bottles per hour. He contacted Nick Bird with Accutek, the producer of Biner Ellison machines, to inquire about the purchase, installation, and maintenance of Accutek's highspeed water bottling equipment. Id. at 8-9. Following this contact, Nick Bird responded by email and provided catalog information on Accutek's bottling equipment line. Id. The catalog displayed bottling machines which featured filling valves made with 316 stainless steel and a rotary rinsing turret made with stainless steel. Id. at 17-18. Orlando Perla testified that he notified Accutek that these were important features for Electropura. Id.

         On October 9, 2012, Joe Quezada, Defendant's sales representative, emailed Orlando Perla and provided a link to Accutek's website. Id. at 18. On the website, Mr. Perla reviewed information regarding Accutek's Monoblock bottling systems which claimed “Biner Ellison manufactures Monoblock machines to simplify your high-speed bottling line by combining the bottle rinser filler and capper in a single space saving machine. Each Monoblock machine is specifically designed to suit product demands, space constraints, and the production environment in order to optimize output and produce the best product possible.” Id. at 21. From this, Mr. Perla understood that Defendant manufactured its Monoblock systems. Id.

         The website also described the Monoblock as featuring a sanitary stainless steel constructed frame which was very important and necessary to Orlando Perla. Id. at 23. In addition, the equipment guidelines from Accutek's web site stated that Accutek machinery is designed and manufactured in the USA with over 80 percent of the Accutek parts and products being manufactured in the USA by American-owned companies. Id. at 25. Mr. Perla testified that this information was also very important that he would not have purchased the subject machine if he had known that it was made in China and not the United States. Id.

         During those negotiations, Electropura told Defendants that it required equipment capable of “filling 680 milliliter-sized bottles at the rate of not less than 7, 200 bottles per hour (“BPH”), 380 milliliter-sized bottles at the rate of not less than 6, 200 BPH and 1, 300 milliliter-sized bottles at the rate of not less than 5, 000 BPH, ” and asked Defendants “for their advice and recommendations as to which of Defendants' several different models of high speed water bottling equipment” would meet those specifications. Electropura's Complaint ¶ 20. In response to Plaintiff's inquiry, Defendant than recommended the “Monoblock rinse, fill, and capping system” as best suited to satisfy Plaintiff's purpose. Id. ¶ 21 (internal citations omitted). At about that same time, Defendant also presented a promotional sales brochure to Electropura that described the “MB Series mono block - rinse/fill cap systems” as having the following qualities and capabilities: “Up to 19, 000 container per hour* high speed synchronized rinse, fall, cap system, ” and “fully automated CCP system.” Id. Ultimately, Defendant specifically recommended that Electropura purchase the “Biner Ellison Monoblock Systems 24 head washer 24 head filler 8 head capper with accessories and parts system” (the “Monoblock”) as the best match for Electropura's needs. Id. ¶ 22 (internal citations omitted).

         On December 10, 2012 Defendants provided Electropura with Quote No. 52113 for a 24 head, 24 filler, and 8 capper Monoblock, along with related parts and accessories. Trial Tr. at 30 (Oct. 29, 2018). The Monoblock Quote was written on Accutek's letterhead, and included the name of the sales representative, Joe L. Quezada, who prepared the report, and described the Monoblock features in detail. ECF No. 1-2, Exhibit 2 at 13. Notably, the Monoblock Quote stated that the machine was “capable of Speeds of up to 11000 BPH (bottles per hour), ” Trial Tr. at 30 (Oct. 29, 2018), ECF No. 1-2 at 15, and that many of its parts were made of stainless steel. Trial Tr. at 31-32 (Oct. 29, 2019). Orlando Perla testified that Accutek represented that all bottle contact parts on the machine were made with food grade stainless steel or food grade plastic. Orlando Perla shared the information he had developed with his brothers and a decision was made to purchase the Biner Ellison machine. Id. at 31-33.

         Between December 2012 and August 2013, the parties worked out the details of the transaction including where the machine would be installed, how much space was available and whether the system would fit at the Electropura plant. Id. at 35-37. At the request of Joe Quezada, Orlando Perla provided Accutek an autoCAD with the layout of the available space at the Electropura plant for the Monoblock so that it could be reviewed by Accutek's engineering department. Id. at 35-37, 39-40. Afterwards, Quezada did not inform Mr. Perla that the available space was too small to achieve the represented production speeds for the machine. Id. at 36-37. Mr. Perla told Quezada “that's what I have. If it doesn't work, it doesn't work.” Id. at 36, 40-41. Quezada reported to Mr. Perla that according to his engineer “yeah, it will work.” Id. Based upon Quezada's representation, Mr. Perla agreed to proceed with the purchase of the Monoblock. Id. at 36-37.

         In reliance upon those representations, Electropura purchased the Monoblock for $370, 408.46. To finance the purchase of the Monoblock, Electropura obtained a loan with a principal of $1, 450, 000, at interest, and allocated $375, 000 to the purchase of the Monoblock machine. ECF No. 127 at 33-34. Thereafter, Electropura incurred additional costs in the shipment and delivery of the Monoblock to El Salvador, amounting to $49, 982.14, and installation of the system, $15, 893.97. ECF No. 1 ¶ 27.

         Soon after the Monoblock was delivered and installed at Electropura's facility in El Salvador, Electropura discovered, on or about December 2013, that the Monoblock was not functioning “in accordance with the representations, specifications, promises, and assurances made by Accutek.” Id. ¶ 28. The Monoblock's actual production hovered at 1, 200 BPH for 1, 300 milliliter-sized bottles, 1, 800 BPH for 680 milliliter-sized bottles, and 2, 400 BPH for 380 milliliter-sized bottles, id., far below Electropura's previously-stated business needs. According to Orlando Perla, the Monoblock was never able to achieve a capacity in excess of 4, 000 BPH for bottles of any size. Trial Tr. at 61 (Oct. 29, 2018).

         In addition, Electropura asserted that the Monoblock did not work properly; that “key components of the Monoblock quickly oxidized and therefore became unsanitary for bottled water use”; and that “many of the Monoblock's key components contained latent but inherent defects in materials and workmanship” making the machine “essentially unfit and unsuitable for its intended purposes.” ECF No. 1 ¶ 28. Trial Tr. at 61-65 (Oct. 29, 2018).

         LEGAL STANDARD

         A. Judgment as a Matter of Law Under Rule 50

         Under Federal Rule of Civil Procedure Rule 50, a court may enter judgment as a matter of law once “a party has been fully heard on an issue” and “the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue.” Fed.R.Civ.P. 50(a)(1). In other words, the jury verdict should be overturned and judgment as a matter of law entered “if the evidence, construed in the light most favorable to the nonmoving party, permits only one reasonable conclusion, and that conclusion is contrary to the jury's verdict.” Pavao v. Pagay, 307 F.3d 915, 918 (9th Cir. 2002). The “jury's verdict must be upheld if it is supported by substantial evidence, which is evidence adequate to support the jury's conclusion, even if it also possible to draw a contrary conclusion.” Id. Moreover, a motion for judgment as a matter of law should be granted “only if the verdict is against the great weight of the evidence, or it is quite clear that the jury has reached a seriously erroneous result.” McEuin v. Crown Equip. Corp., 328 F.3d 1028, 1036 (9th Cir. 2003), as amended on denial of reh'g and reh'g en banc (June 17, 2003).

         In evaluating a motion for judgment as a matter of law, a court does not make credibility determinations or weigh the evidence. See Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133 (2000); see also EEOC v. Go Daddy Software, Inc., 581 F.3d 951, 961 (9th Cir. 2009). “Credibility determinations, the weighing of evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.” Id. Instead, the court “must draw all reasonable inferences in favor of the nonmoving party.” Id. That is, “the court should give credence to the evidence favoring the nonmovant as well as ‘that evidence supporting the moving party that is uncontradicted and unimpeached, at least to the extent that that evidence comes from disinterested witnesses.'” Id. at 151, 120 S.Ct. 2097 (internal citation omitted).

         B. New Trial Under Rule 59

         Under Federal Rule of Civil Procedure 59(a), a new trial may be granted on all or some of the issues “for any reason for which a new trial has heretofore been granted in an action at law in federal court.” Fed.R.Civ.P. 59(a)(1)(A). Because “Rule 59 does not specify the grounds on which a motion for a new trial may be granted, ” the court is bound by historically recognized grounds. Zhang v. Am. Gem Seafoods, Inc., 339 F.3d 1020, 1035 (9th Cir. 2003). These grounds include verdicts contrary to the weight of the evidence, a verdict based on false or perjurious evidence, damages that are excessive, and trials that were not fair to the moving party. Molski v. M.J. Cable, Inc., 481 F.3d 724, 729 (9th Cir. 2007); see also Passatino v. Johnson & Johnson Consumer Prods., 212 F.3d 493, 510 n.15 (9th Cir. 2000) (“The trial court may grant a new trial only if the verdict is contrary to the clear weight of the evidence, is based upon false or perjurious evidence, or to prevent a miscarriage of justice.”). Erroneous evidentiary rulings and errors in jury ...


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