913 F.3d 726
8th Cir.2019Background
- Rydex and Graco entered a 2005 Settlement and License Agreement granting Graco an exclusive patent license and obligating Rydex to prosecute third‑party infringers and pay/receive 5% royalties.
- Rydex sued third party Badger for infringement in 2011; the Badger litigation was dismissed with prejudice in 2012 after which the district court found Rydex had breached its duty to prosecute and the exclusivity provision as of the dismissal date.
- Graco stopped paying royalties on December 31, 2013, alleging Rydex’s breaches excused its performance; Rydex sued Graco for breach of contract (royalties) and Graco counterclaimed for contract breaches and declaratory relief.
- At trial the district court granted partial Rule 50 rulings: Rydex breached prosecution and exclusivity obligations as of the Badger dismissal and an implied license existed as to Badger’s prior use; the jury nonetheless was asked to decide limited questions (including whether Rydex breached exclusivity from 2005–2012 and amounts of damages).
- The jury awarded Rydex $313,000 for unpaid royalties (Dec. 31, 2013–Mar. 10, 2015), awarded Graco $0 for the breaches the court found as a matter of law, and found Rydex did not breach exclusivity from 2005–2012.
- Post‑trial the district court denied Graco’s renewed JML and new‑trial motions, concluded the jury implicitly found Rydex’s breaches were not material, and awarded Rydex $204,221.50 in attorney’s fees under the contract; both parties appealed (Graco on JML/new trial/fees; Rydex challenging fee reduction).
Issues
| Issue | Rydex (Plaintiff) Argument | Graco (Defendant) Argument | Held |
|---|---|---|---|
| Whether Rydex’s admitted breaches preclude its recovery of royalties | Breaches were not material; Graco continued to accept benefits and jury could find non‑materiality | Any breach bars enforcement of the contract; district court’s legal finding of breach should preclude recovery | Court held materiality is a jury question under Iowa law; jury reasonably could find breaches non‑material, so Rydex may recover royalties |
| Whether omission of a specific materiality instruction or other proffered instructions was reversible error | Materiality was argued and effectively presented to jury; instructions as a whole sufficed | Court should have given explicit materiality and good‑faith instructions requested by Graco | Court found instructions, taken as a whole, adequately represented law and evidence; no reversible error |
| Sufficiency review of denial of Graco’s JMOL/new trial motions | Jury verdict (viewed favorably to Rydex) supported damages award despite court’s earlier legal rulings | Court’s prior Rule 50 rulings that Rydex breached should have compelled judgment for Graco | On de novo review, appellate court affirmed denial of JMOL; jury’s factual findings could reasonably support the verdict; new trial denial not an abuse of discretion |
| Whether the attorney’s‑fees award was proper in identity and amount | Rydex was prevailing party under contract fee clause; awarded fee amount reasonable despite reductions | Fee award should be reduced further or capped by contingent agreement with counsel | Court affirmed that Rydex was prevailing party and that the district court did not abuse discretion in the reasonableness reductions or award amount |
Key Cases Cited
- Sturgis Motorcycle Rally, Inc. v. Rushmore Photo & Gifts, Inc., 908 F.3d 313 (8th Cir. 2018) (standard for reviewing JMOL and viewing evidence favorably to verdict winner)
- Washington v. Denney, 900 F.3d 549 (8th Cir. 2018) (new trial review is for abuse of discretion)
- Van Oort Constr. Co. v. Nuckoll's Concrete Serv., Inc., 599 N.W.2d 684 (Iowa 1999) (materiality of breach can excuse performance; mixed question of law and fact)
- Kelly v. Iowa Mut. Ins. Co., 620 N.W.2d 637 (Iowa 2000) (only a material breach excuses counter‑performance)
- Johnson Reg'l Med. Ctr. v. Halterman, 867 F.3d 1013 (8th Cir. 2017) (de novo review of prevailing‑party determination; abuse‑of‑discretion review of fee amount)
- FutureFuel Chem. Co. v. Lonza, Inc., 756 F.3d 641 (8th Cir. 2014) (standards for appellate review of attorneys’‑fees awards)