Asset Marketing Services, LLC v. JAM Products, Inc.et al

Background

Asset Marketing Services, LLC (AMS) sought damages from JAM Products, Inc. and Steven Harris concerning their delivery of Coca-Cola coins. AMS alleged that the defendants breached their contractual obligation to obtain authorization from Fiji giving the coins legal-tender status before delivery and that importing the coins violated the Hobby Protection Act, 15 U.S.C. § 2101 et seq.

JAM Products asserted counterclaims alleging that AMS failed to pay royalties, tortiously interfered with JAM Products’ contract with Shanghai New Century Minting, and failed to reimburse two U.S. Customs duties assessed on the coins. The case was tried to a jury from August 2 through August 6, 2021. At the close of the defendants’ evidence, AMS made an oral motion for judgment as a matter of law under Federal Rule of Civil Procedure 50(a). That rule allows a court to decide an issue against a party before it reaches the jury when, after the party has presented its evidence, no reasonable jury could legally find for that party.

Tortious-Interference Counterclaim

The court held that JAM Products had not presented evidence beyond speculation and conjecture to support its claim that AMS tortiously interfered with JAM Products’ contract with Shanghai New Century Minting. The court found no evidence that Shanghai New Century Minting breached a contract with JAM Products. The court also found no evidence, apart from speculation, that AMS’s conduct was unjustified or that the business relationship between AMS and Shanghai New Century Minting resulted from wrongful conduct.

The court therefore granted AMS’s motion with respect to JAM Products’ tortious-interference counterclaim.

Customs-Duty Counterclaim

The parties’ Consulting Agreement required AMS to reimburse expenses that were reasonable and actually and necessarily incurred in performing services. The court found that JAM Products had not shown that the two customs duties met those requirements. Steven Harris testified that the duties should not have been assessed because a broker misclassified the coins as kitchenware; he said the coins would not have been subject to the duties if classified as legal tender. The court also noted that one duty was reversed and that JAM Products obtained a judgment against FedEx for a refund of the other duty.

The court therefore granted AMS’s motion with respect to JAM Products’ counterclaim for reimbursement of the customs duties.

Royalty Counterclaim

AMS argued that the evidence conclusively showed that JAM Products’ alleged material breach excused AMS from paying royalties. The court rejected that request at this stage. It explained that whether a breach was material—that is, significant enough to excuse the other party’s performance—was a factual question. Viewing the evidence in the light most favorable to JAM Products, the court found that a reasonable jury could conclude that any breach was not material.

The court therefore denied AMS’s motion with respect to JAM Products’ counterclaim concerning AMS’s duty to pay royalties.

Hobby Protection Act Claim

The Hobby Protection Act prohibits importing, distributing, or selling an imitation numismatic item that is not plainly and permanently marked “copy.” The court found that the disputed coins were imported for commercial purposes and were not marked as copies. The remaining question was whether the coins were imitation numismatic items—items that purport to be original numismatic items but are not.

The coins purported to be legal tender authorized by Fiji because they displayed Fiji’s coat of arms and denomination markings, and the parties’ witnesses testified that the coins were intended to be legal tender. But the court found that no reasonable jury could conclude that Fiji had authorized the coins as legal tender when they were imported. Although some documents created a factual dispute, the court relied on the weight of the evidence, including Harris’s testimony that the coins were not legal tender at that time and Fiji’s later charge for authorization.

The court therefore granted AMS’s motion concerning the defendants’ liability under the Hobby Protection Act.

Contractual Duty to Obtain Approval

The defendants argued that the parties’ agreements did not require them to obtain approval from Fiji’s issuing authority before delivering the coins. The court held that interpreting the contract was its responsibility rather than the jury’s. It concluded that the Consulting Agreement, including Amendment 1, required the defendants to obtain all necessary third-party or licensor consents for proposed licensed JAM Products.

The court found the contract language at least ambiguous, but determined that undisputed trial testimony and other evidence showed that the parties understood the defendants had to obtain issuing-authority approval before delivering the coins. The court therefore construed the reference to “third party and/or licensor consents” as including approval from licensors and any necessary issuing authority.

Disposition

Judge Susan Richard Nelson ordered that AMS’s motion for judgment as a matter of law was granted in part and denied in part. It was granted on the defendants’ liability under the Hobby Protection Act and on JAM Products’ counterclaims for tortious interference with contract and reimbursement of the customs duties. It was denied on JAM Products’ breach-of-contract counterclaim concerning AMS’s duty to pay royalties.