United States District Court, W.D. Kentucky, Louisville
BABCOCK POWER, INC., and VOGT POWER INTERNATIONAL., INC., PLAINTIFFS
Stephen T. KAPSALIS, and EXPRESS GROUP HOLDINGS, LLC, DEFENDANTS
MEMORANDUM OPINION AND ORDER
Charles R. Simpson III, Senior Judge United States District
case is before the Court on Defendant Stephen Kapsalis's
motion to alter or amend the final trial order and judgment
entered in this case. DN 622. Plaintiffs Babcock Power, Inc.
and Vogt Power International, Inc. responded. DN 628.
Kapsalis replied. DN 632. Therefore, this matter is ripe for
review. Finding that the evidence at trial failed to
demonstrate that Plaintiffs experienced damage flowing from
Kapsalis's breach of contract, the Court will grant the
motion and amend the trial order and judgment to award only
nominal damages on the Plaintiffs' breach of contract
Federal Rules of Civil Procedure permit litigants subject to
an adverse judgment to move the Court to alter or amend the
judgment. Fed.R.Civ.P. 59(e). This rule does not, however,
“allow a defeated litigant a second chance to present
new explanations, legal theories, or proof.” Melton
v. Litteral, No. 1:17-CV-120-GNS, 2018 WL 5258626, at *2
(W.D. Ky. Oct. 22, 2018) (citation omitted). Instead,
“Rule 59(e) motions give district courts an opportunity
to fix their own errors, ‘sparing the parties and
appellate courts the burden of unnecessary appellate
proceedings.'” Id. (quoting Howard v.
United States, 533 F.3d 472, 475 (6th Cir. 2015)).
Granting a Rule 59(e) motion is appropriate when there is:
“(1) a clear error of law; (2) newly discovered
evidence; (3) an intervening change in controlling law; or
(4) a need to prevent manifest injustice.” Id.
(quoting Schlaud v. Snyder, 785 F.3d 1119, 1124 (6th
Cir. 2015)). Rule 59(e) motions are “extraordinary and
sparingly granted.” Id. (citation omitted).
The burden of showing entitlement to Rule 59(e) relief is on
the moving party. Id. (citation omitted). While
undertaking this analysis, the Court views the facts in the
light most favorable to the jury's verdict. See e.g.
Adams v. City of Chicago, 798 F.3d 539, 543 (6th Cir.
Factual and Procedural Background
was hired by Babcock as Chief Operating Officer in 2009.
Shortly thereafter, Kapsalis was transferred to the position
of Chief Executive Officer of Vogt, a wholly owned subsidiary
of Babcock. In 2013, Kapsalis left Vogt to become President
and CEO at Express Group Holdings, LLC, a competitor of
Plaintiffs. Plaintiffs sued, alleging that Kapsalis took
various items of trade secret information with him when he
left. After a trial, the jury concluded that Kapsalis
misappropriated Plaintiffs' trade secret information
consisting of Schematic and Mechanical Drawings and Strategic
Plans. The jury also found that Kapsalis breached his
Employee Non-Disclosure, Non-Solicitation, Non-Competition
and Assignment Agreement with Plaintiffs regarding their CAD
Standards, Calculation Sheets, Customer/Contacts Lists,
Schematic and Mechanical Drawings, and Strategic Plans. The
jury awarded $175, 672.00 on the trade secret
misappropriation claims and $202, 865.00 on the breach of
contract claims. The subsequent trial order and judgment (DN
620) gives rise to Kapsalis's motion.
argues inter alia that the Court made an error of
law-from which manifest injustice will result-in permitting
Plaintiffs to recover more than nominal damages on their
breach of contract claim. This is so, he argues, because
Plaintiffs failed to produce evidence of damages at trial
sufficient to support a claim for breach of contract.
Ultimately, the Court agrees and will grant the motion to
alter or amend.
prevail on a breach of contract claim in Kentucky, a
plaintiff must demonstrate by a preponderance of the evidence
that (1) a contract existed, (2) the contract was breached,
and (3) plaintiff suffered loss/damages flowing from the
breach. Sudamax Industria e Comercio de Cigarros, Ltda.
v. Buttes & Ashes, Inc., 516 F.Supp.2d 841, 845
(W.D. Ky. 2007). However, in a case where a plaintiff cannot
demonstrate “actual damages, ” Kentucky permits
recovery of nominal damages. Harness v. Ky. Fluor Spar
Co., 147 S.W. 934, 940 (Ky. 1912) (citation omitted).
“This is true even though proof of damages is a
required element of a breach of contract claim.”
United Parcel Service Co. v. DNJ Logistic Group,
Inc., No. 3:16-CV-609-GNS, 2017 WL 3097531, at *3 (W.D.
Ky. July 19, 2017) (citation omitted).
damages” sufficient to support a compensatory damages
award may be demonstrated through a showing of lost profits,
unjust enrichment, or some other use or disclosure of
information protected by a confidentiality or non-disclosure
agreement. See e.g. Vitro Corp. of Am. v. Hall Chemical
Co., 292 F.2d 678, 682 (6th Cir. 1961) (requiring
“a plain injury” to recover compensatory
damages); DNJ Logistics, 2017 WL 3097531, at *3
(“actual damages” exist when shipments were
returned, resulting in service failures and additional costs
in completing outstanding contracts); Structural Dynamics
Research Corp. v. Eng'g Mechs. Research Corp., 401
F.Supp. 1102, 1119 (E.D. Mich. 1975) (compensatory damages
available where “defendants misused confidential
information” even though “defendants have not
made a profit” and plaintiff did not lose profits).
arguing that damages were not proved, Kapsalis directs the
Court to the cross-examination of Tony Thompson, the Director
of Engineering for Babcock. There, counsel for Kapsalis
elicited repeated admissions that Plaintiffs did not
experience damage and that Plaintiffs had no evidence that
Kapsalis had used or disclosed their alleged trade secret
information. Ultimately, Kapsalis was able to obtain such
testimony regarding the CAD Standards, DN 581 at 6:7-7:1
(sealed), Calculation Sheets, Id. at 9:23-10:6,
Schematic and Mechanical Drawings, Id. at
10:20-11:9, DN 582 at 20:7-21:7 (sealed), and Strategic
Plans, DN 581 at 11:10-13:9 (sealed). The entire encounter was
summed up in one question and answer:
Q. And with respect to [the CAD standards, calculation
sheets, schematic drawings, and strategic plans], just to
make sure that we're clear for the record, both
personally and as the corporate representative for Vogt and
BPI, you're not aware of any evidence that Steve Kapsalis
or Express used any of these, disclosed them, ...