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

Background

Asset Marketing Services, LLC (AMS) sued JAM Products, Inc., doing business as S&A Partners, and Steven Harris concerning collectible coins. AMS asserted claims under the Hobby Protection Act (HPA), 15 U.S.C. § 2101 et seq., and common-law claims for breach of contract and unjust enrichment. Defendants denied the allegations and brought counterclaims for tortious interference with contract and breach of contract.

Before trial, the court ruled that the HPA provides a private right of action for merchants such as AMS and is not limited to coin collectors, hobbyists, or unsophisticated consumers. The court also ruled that intent and knowledge are not relevant to liability under the HPA or for breach of contract.

After a jury trial, the court granted AMS judgment as a matter of law on defendants’ HPA liability. It also granted AMS judgment as a matter of law on part of defendants’ counterclaims concerning duty charges. The jury found for AMS on its breach-of-contract claim, awarded AMS its requested damages of $140,464.25, and awarded defendants no damages on their breach-of-contract counterclaim.

Defendants’ Motion for Judgment as a Matter of Law

Defendants renewed their motion for judgment as a matter of law under Federal Rule of Civil Procedure 50(b), or alternatively sought a new trial under Rule 59(a)(1)(A). Judgment as a matter of law may be granted only when a reasonable jury would lack a legally sufficient evidentiary basis for its verdict. The court must view the evidence favorably to the party that prevailed at trial and deny the motion if reasonable people could disagree about the evidence.

The HPA prohibits importing, distributing, or selling an imitation numismatic item that is not plainly and permanently marked “COPY.” An imitation numismatic item is one that claims to be an original numismatic item but is not. Defendants did not dispute that they imported the coins for distribution or sale or that the coins were not marked “COPY.” The dispute concerned whether the coins were authorized by Fiji when imported.

The court rejected defendants’ argument that a June 2019 Bank of Fiji letter retroactively authorized the coins from the time they were struck. The record included Harris’s trial testimony that the coins were not legal tender when imported, evidence that Fiji later charged Harris for authorization, and a February 2019 report finding that the coins were not properly authorized at importation. The court held that the evidence supported its earlier finding that defendants violated the HPA and the parties’ contract by importing imitation numismatic items without the required markings. It therefore denied the portion of defendants’ motion seeking judgment as a matter of law on that ground.

The court also denied defendants’ argument that judgment should be entered in their favor because they lacked knowledge or intent. It held that the HPA’s plain language does not make intent or knowledge an element of a claim against primary violators such as the importers and manufacturers involved here. The court described the HPA liability at issue as strict liability, meaning liability does not depend on the defendant’s intent or knowledge.

Defendants’ Motion for a New Trial

The court may grant a new trial only when the first trial resulted in a miscarriage of justice, such as through a verdict against the great weight of the evidence, an excessive damages award, or prejudicial legal error. The court denied defendants’ request on each asserted ground.

The court rejected defendants’ argument that intent and knowledge were required under the HPA. It explained that the regulation defendants cited applied to people who substantially assist primary violators, while defendants were alleged to be primary violators. The court also reaffirmed that the HPA permits sophisticated commercial entities such as AMS to seek relief under the statute.

The court further held that it had applied the correct legal standard when granting AMS judgment as a matter of law on HPA liability. Although some documentary evidence conflicted, the record included Harris’s admissions and other evidence supporting the conclusion that the coins were not authorized when imported. The court found that a contrary finding would have required speculation.

The court also found sufficient evidence to support the jury’s breach-of-contract verdict and damages award. This included the monthly retainer payments AMS made from January through April 2018 for coins approved as legal tender by Fiji. The evidence showed that defendants did not deliver legal-tender coins. The court found no basis to disturb the jury’s award.

Finally, the court rejected defendants’ challenges to four evidentiary rulings. It found that excluded evidence concerning AMS’s alleged HPA violation and alleged copyright claim was irrelevant because defendants had not asserted corresponding claims. It also found that the admitted legal invoices, testimony, holding-cost evidence, and related exhibits were properly admitted and did not prejudice defendants. The court therefore denied defendants’ motion for a new trial.

AMS’s Motion for Attorneys’ Fees and Costs

AMS sought $328,203.95 in attorneys’ fees and costs under the HPA and also argued that the parties’ contract authorized recovery. The court held that the HPA permits, but does not require, an award to a prevailing plaintiff.

The court declined to award fees and costs under the HPA. It found that AMS’s counsel had represented AMS skillfully and successfully, but concluded that the circumstances did not justify a discretionary award. The court rejected AMS’s arguments that defendants’ refusal to discuss settlement and Harris’s changing testimony showed bad-faith litigation tactics or warranted shifting the litigation costs.

The court also held that the contract did not authorize AMS to recover fees and costs in this lawsuit. The relevant indemnity provision addressed third-party claims and included procedures under which an indemnifying party could control the defense of a claim. The court concluded that the provision did not apply to litigation between AMS and defendants and was not a prevailing-party attorneys’ fee provision.

Disposition

The court denied Plaintiff’s Motion for Attorneys’ Fees and Costs. It also denied Defendants’ Motion for Judgment as a Matter of Law or in the Alternative for a New Trial.