Multimatic, Inc. v. Faurecia Interior Systems USA, Inc.

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 09a0820n.06

Nos. 08-1332, 08-1420 FILED
Dec 22, 2009
UNITED STATES COURT OF APPEALS LEONARD GREEN, Clerk
FOR THE SIXTH CIRCUIT

MULTIMATIC, INC., )
)
Plaintiff-Appellee/Cross-Appellant, )
)
v. )
) ON APPEAL FROM THE UNITED
FAURECIA INTERIOR SYSTEMS USA, ) STATES DISTRICT COURT FOR THE
INC., ) EASTERN DISTRICT OF MICHIGAN
)
Defendant-Appellant/Cross-Appellee. )
)
)

Before: CLAY and SUTTON, Circuit Judges; THAPAR, District Judge.*

SUTTON, Circuit Judge. Faurecia Interior Systems USA appeals (1) the district court’s

summary judgment decision that it breached a confidentiality agreement with Multimatic and (2) the

jury’s $10 million damage award. Multimatic cross-appeals the district court’s exclusion of its

damages expert, who claimed Multimatic suffered an additional $28.7 million in damages. Because

the district court properly granted summary judgment on liability, the jury’s verdict is supported by

sufficient, and properly admitted, evidence and the district court did not abuse its discretion in

excluding Multimatic’s damages expert, we affirm.

*
The Honorable Amul R. Thapar, United States District Judge for the Eastern District of
Kentucky, sitting by designation.
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I.

In October 2003, DaimlerChrysler selected Faurecia to supply instrument panels for its JS41

vehicle program, which covered the 2007 to 2012 Sebring and Avenger vehicle lines. In early 2004,

Faurecia selected Multimatic to design the instrument panel’s cross-car beam. In connection with

this agreement, Multimatic asked Faurecia to sign a confidentiality agreement, which it did in

February 2004.

With the confidentiality agreement in place, Multimatic and Faurecia began collaborating

weekly on the cross-car beam design. At the same time, Multimatic began working on an alternate

design—dubbed the “mass saving design”—that would meet Faurecia’s requirements but weigh

several pounds less than the current design. By November 2004, Multimatic was ready to focus

solely on the mass saving design. But because the parties had not yet agreed on a price for the cross-

car beams, Multimatic worried (correctly) that Faurecia might switch suppliers. Faurecia signed a

pre-development letter of intent that month to assuage Multimatic’s concerns, and the two parties

shifted their focus to refining the mass saving design.

In April 2005, Faurecia again looked to switch cross-car beam suppliers because the parties

could not agree on a price for the product. It selected Brown Corporation as its new pre-production

cross-car-beam supplier in May 2005 and terminated its relationship with Multimatic. Brown

remained the cross-car-beam supplier once the JS41 program began production in 2006.

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In May 2005, Multimatic filed this lawsuit against Faurecia, alleging that it breached the

confidentiality agreement, breached the November 2004 letter of intent and breached several

prototype purchase orders. The district court granted summary judgment for Multimatic on the

breach-of-confidentiality-agreement claim and summary judgment for Faurecia on the breach-of-

letter-of-intent claim. After a trial, a jury awarded Multimatic $9,381,306 for Faurecia’s breach of

the confidentiality agreement and $600,515 for breach of the purchase orders. Both parties appeal.

II.

We first consider whether the district court properly granted summary judgment to

Multimatic on liability. This aspect of the appeal boils down to two questions: (1) Does the

confidentiality agreement cover information created after Multimatic and Faurecia executed it and

(2) did Faurecia reveal information owned exclusively by Multimatic? In answering these questions,

we must give Faurecia the benefit of all reasonable factual inferences. See Cavin v. Honda of Am.

Mfg., Inc., 346 F.3d 713, 719 (6th Cir. 2003).

A.

As to the first question, Multimatic and Faurecia signed the confidentiality agreement so that

they could share “their respective CAD designs, drawings, analysis models and results” concerning

the cross-car beam that “Multimatic will design and supply.” ROA 236. The agreement protects

“sensitive information” that “each of Multimatic . . . and Faurecia possesses,” defined as:

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[P]roprietary confidential information pertaining to its business and customers and
. . . technical information relating to its products, designs and services, including
compositions, raw materials, formulations, additives, components, production
processes, plant layout, engineering concepts and designs, analysis models and
results, know-how, and other intellectual or industrial property, which is generally
not available to the public.

Id. The agreement adds that Multimatic and Faurecia must disclose any sensitive information

“necessary to develop and supply” the cross-car beam during the agreement’s three-year term. Id.

And it provides that neither party may share sensitive information obtained under the confidentiality

agreement with third parties unless they first impose “similar” confidentiality obligations. Id.

Under Michigan law, as under the law of most (if not all) States, courts will enforce the terms

of a contract if they have a “clear, unambiguous, and . . . definite meaning.” Mahnick v. Bell Co.,

662 N.W.2d 830, 832–33 (Mich. Ct. App. 2003); see also Rory v. Continental Ins. Co., 703 N.W.2d

23, 28 (Mich. 2005). Courts determine the meaning of unambiguous contract provisions, and juries

generally determine the meaning of ambiguous provisions when there is competing extrinsic

evidence over how to construe them. Mahnick, 662 N.W.2d at 833.

In our view, as in the view of the district court, the confidentiality agreement unambiguously

covers pre-existing and future trade secrets. The preamble looks to the future, contemplating that

Multimatic “will design” the cross-car beam and will share its “designs, drawings” and other

information created during that process. ROA 236. The agreement’s disclosure obligation confirms

this forward-looking perspective, mandating disclosure of sensitive information “necessary to

develop” the cross-car beam. Id. And nothing in the agreement draws a distinction between pre-

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existing and future information. The definition of “sensitive information” does not include the

modifier “pre-existing” or otherwise restrict itself to a discrete time period.

The agreement also confirms that the parties knew how to exclude information from the

compass of protected trade secrets. Immediately after defining sensitive information, it excludes

information in the public domain and information the receiving party lawfully possessed prior to

disclosure. In this context, had the agreement meant to exclude information post-dating its

execution, one would expect to see language to that effect alongside the other carve-out clauses.

Our interpretation also gives effect to “every word” in the definition of sensitive information.

See Associated Truck Lines, Inc. v. Baer, 77 N.W.2d 384, 386 (Mich. 1956). The definition picks

up several types of information created during the design process—many of which necessarily would

occur in the future—such as engineering designs, analysis models and results. If the agreement

covers future information, as we think it does, the inclusion of these types of covered information

in the definition imposes meaningful obligations. Were we to interpret the confidentiality agreement

to cover only pre-existing information, by contrast, that would leave these provisions with no role

to play.

Faurecia offers three rejoinders. First, it notes that the agreement repeatedly uses the present

tense, including the verb “possesses” in the definition of sensitive information, suggesting that the

agreement covers just pre-existing trade secrets. But it is not that easy. All contracts use the present

tense—at least in part. And the parties’ use of the present tense here provides a baseline for creating

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existing and future obligations, and the context of the agreement and its other terms show that the

agreement covers both types of commitments. Proving the point, legal drafters frequently use the

present tense to cover the present and the future. See, e.g., 1 U.S.C. § 1; Mich. Comp. Laws

§§ 141.602, 141.1162, 206.2, 257.80; Heniser v. Frankenmuth Mut. Ins. Co., 534 N.W.2d 502, 503,

505, 509 (interpreting contract term to cover the future even though it was drafted in the present

tense); Bryan A. Garner, A Dictionary of Modern Legal Usage 939 (2d ed. 1995). Verb tense alone

cannot hold the weight that Faurcia places on it.

Second, the obligation to disclose sensitive information “to the extent necessary to design and

develop” the cross-car beam, Faurecia argues, has no work to do if the agreement includes

information created during the design process. Not so. The phrase still protects pre-existing

information from disclosure to the same extent as an interpretation covering only pre-existing

information.

Third, Faurecia worries that extending the confidentiality agreement to cover future

information—especially the cross-car beam design itself—would give Multimatic the ability to

“shut[] down production of an entire line of vehicles” because the agreement allows either party to

request the immediate return of its sensitive information at any time. Faurecia Br. at 29. But

Chrysler’s policies indicate that it will not incorporate third-party designs into its production vehicles

unless it has an irrevocable right to produce and use that design. The confidentiality agreement thus

was prologue to a supply or licensing agreement, which would address these types of concerns if and

when Faurecia chose to use (and pay for) Multimatic’s design.

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Nor does the promise to protect sensitive information become illusory if the confidentiality

agreement covers future information. Faurecia complains that Multimatic could circumvent its

disclosure obligation by immediately asking Faurecia to return any disclosed design materials. But

the agreement’s implicit covenant of good faith and fair dealing alleviates this concern. See Lowes

Home Centers, Inc. v. LL & 127, LLC, 147 F. App’x 516, 523–24 (6th Cir. 2005).

B.

Faurecia separately argues that Multimatic did not exclusively own the information that

Faurecia disclosed to Brown. Yet it is beyond question, as an initial matter, that Faurecia shared the

cross-car beam design and associated engineering documents with Brown in April or May 2005.

Brown needed the information to provide an accurate quote, which it gave to Faurecia on May 18,

2005. Brown’s 2006 three-dimensional cross-car beam models also perfectly match Multimatic’s

2005 models “except for minor revisions . . . resulting from a more mature vehicle package” by

Chrysler. R.84 Ex. 33 at 21, 27. Faurecia offers no evidence suggesting that Brown recreated the

design from scratch.

Once Faurecia transitioned the cross-car-beam project from Multimatic to Brown, it also

disclosed Multimatic’s design-failure mode and effects analysis and its design verification plan and

report. Both represent “core engineering documents” that disclose Multimatic’s quality assurance

processes, such as how to test for and prevent cross-car beam failures. R.84 Ex. 33 at 4, 20. These

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documents by their nature come within the categories of “information pertaining to [Multimatic’s]

business” and “analysis models and results” protected by the confidentiality agreement. ROA 236.

Multimatic exclusively owned this information. All of the record evidence—including

deposition testimony by two Faurecia employees intimately involved in the cross-car beam

development—indicates that Multimatic alone created the 3D models Faurecia shared with Brown

in 2005. Faurecia may well dispute who came up with some of the ideas embodied in the 3D

models, but that does nothing to counter the reality that Multimatic created the models.

In addition, Multimatic solely created and solely owned the engineering documents Faurecia

provided to Brown. Only Multimatic employees are identified as creating and maintaining those

documents. And Faurecia forwarded the Multimatic emails containing those documents to Brown

without any modification or comment.

Copyright law—the legally cognizable form of ownership in 3D models, see 17 U.S.C.

§ 102(a)(5); Robert B. Jones Assocs., Inc. v. Nino Homes, 858 F.2d 274, 278 (6th Cir. 1988)—

confirms Multimatic’s exclusive ownership of the cross-car beam models. To transfer copyright

ownership, the copyright owner must sign a written instrument acknowledging the transfer. See 17

U.S.C. § 204(a). Faurecia has not produced any writing signed by Multimatic that transfers its

copyright in the 3D models to Faurecia or to Chrysler.

Faurecia disagrees, pointing to a January 2005 email from Lee James, a Multimatic engineer,

who agrees to comply with several of Chrysler’s cross-car beam specification requirements,

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including some in Chrysler’s PS-7000 process standard. In that standard, Chrysler outlines technical

specification requirements for designs created by third-party suppliers. But it also describes two

potential IP ownership arrangements between outside suppliers and Chrysler: either the supplier

retains IP ownership but grants Chrysler a license to use the IP or the supplier assigns IP ownership

to Chrysler.

According to Faurecia, a jury could infer from James’ email that Multimatic agreed to give

Chrysler ownership in the cross-car beam design. That is a stretch. A jury could not reasonably infer

that a Multimatic engineer’s email to Faurecia acknowledging screw-torque testing procedures,

welding specifications and “mill oil and lubricant requirements” simultaneously assigned the

company’s intellectual property ownership to Chrysler—all without mentioning intellectual property

ownership at any point in the email. R.85 Ex. R. The PS-7000 standard itself also acknowledges

that suppliers do not transfer IP ownership until Chrysler and the supplier execute a purchase order

for the supplier’s vehicle component. Multimatic and Chrysler never did so for the cross-car beam.

Faurecia persists that Multimatic assigned ownership of its 3D models to Chrysler by

uploading them to Chrysler’s Virtual Product Manager (VPM) system. By logging into VPM,

Multimatic “acknowledg[ed]” that VPM and its data are valuable DaimlerChrysler assets and that

it could use these assets only in authorized ways. R.91 Ex. LL. A “Confidentiality Agreement” on

the VPM welcome screen also states, “All information and content on the [Chrysler] network is the

confidential and proprietary property of” Chrysler, which VPM users cannot disclose to others. R.91

Ex. LL.

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Yet these statements do not automatically assign ownership over information uploaded into

VPM to Chrysler. To acknowledge that someone owns a book is not the same as acknowledging that

they own the copyright in the book. By logging into VPM, Multimatic likewise acknowledged only

that the data in VPM—not the intellectual property embodied in that data—belong to Chrysler.

Chrysler’s PS-7000 process standard adds force to this conclusion. All 3D models for

Chrysler vehicle components must be uploaded into VPM, so any promise under the PS-7000

standard that a supplier could retain IP ownership over its design would be a dead letter if uploading

information into VPM automatically transferred ownership to Chrysler. Two acknowledgments on

a login screen did not render Chrysler’s carefully crafted contract terms meaningless and deceptive.

In the end, Faurecia fails to offer any reason why the application of a carefully negotiated

confidentiality agreement in this context would implicitly give up what it explicitly protects:

intellectual property rights.

III.

Faurecia separately challenges the jury’s $10 million damage award. Multimatic’s principal

evidence supporting its $10 million lost-profits claim came through the testimony of Lawrence

Simon, one of its damages experts. Simon, a CPA for twenty-four years, testified that Multimatic

lost roughly $9.4 million in profits when Brown, not Multimatic, supplied the cross-car beam for the

JS-41 program. Simon calculated this figure by multiplying the number of cars Chrysler would

produce under the JS41 program (according to publicly available automotive forecasting

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information) by Multimatic’s estimated profits per cross-car beam. See id. at 28. He then estimated

the profits per beam based on a February 2005 Multimatic price quote, which included a pricing

structure similar to the November 2004 letter of intent.

Simon also testified that Multimatic incurred an additional $600,515 in damages from unpaid

purchase orders for cross-car beam prototypes. He arrived at this figure by adding up the invoice

amount on each unpaid prototype invoice that he could tie to a Faurecia purchase order. This

included purchase orders for prototypes that Multimatic produced but did not ship to Faurecia in May

2005.

A.

Faurecia claims the jury verdict cannot stand as a matter of law. We give fresh review to this

claim, apply the law of the forum state (Michigan) in assessing the sufficiency of the evidence, see

K & T Enters., Inc. v. Zurich Ins. Co., 97 F.3d 171, 175–76 (6th Cir. 1996), and view the evidence

in the light most favorable to Multimatic, see In re Brown, 342 F.3d 620, 626–27 (6th Cir. 2003).

According to Faurecia, Multimatic cannot show that the parties contemplated lost-production

profits for breaching the confidentiality agreement. A plaintiff can recover only for damages “that

arise naturally from the breach or those that were in the contemplation of the parties at the time the

contract was made.” Kewin v. Mass. Mut. Life Ins. Co., 295 N.W.2d 50, 52–53 (Mich. 1980). While

we agree that lost-production profits are not an inevitable consequence of breaching a confidentiality

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agreement, the jury had ample evidence to conclude that the parties contemplated such damages at

the time of contracting.

Mark Sullivan, a Multimatic manager who oversaw the cross-car beam project, testified

about the company’s intention in signing the confidentiality agreement: Faurecia remained free to

use any supplier it wished for the JS41 program, but if it used Multimatic’s design, Faurecia had to

permit Multimatic to supply the beam. He pointed to language in the agreement that reflected this

intention. And he testified that he communicated this understanding to Faurecia on several

occasions. Based on this evidence, a jury could reasonably infer that Faurecia understood that, if it

used the Multimatic design protected by the confidentiality agreement, it would have to use

Multimatic to supply the product.

Faurecia fares no better in arguing that the lost-profit award is unduly speculative. Under

Michigan law, sure enough, a plaintiff cannot recover damages “based on mere conjecture or

speculation.” Sullivan Indus., Inc. v. Double Seal Glass Co., Inc., 480 N.W.2d 623, 632 (Mich. Ct.

App. 1991). Yet damages calculations with a “reasonable basis of computation” clear this hurdle

even though the results are “only approximate,” Waskin Dev. Co. v. Weyn, 119 N.W.2d 662, 665

(Mich. 1963), and “speculative to some degree,” Lorenz Supply Co. v. Am. Standard, Inc., 300

N.W.2d 335, 340 (Mich. Ct. App. 1980).

The damages evidence satisfies this standard. Simon had a reasoned, non-speculative basis

for projecting profits through 2012. His yearly vehicle production forecasts for the JS41 program

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came from a reliable industry forecaster upon whom the automakers themselves rely. Several

witnesses testified that the automakers rarely, if ever, change production suppliers once production

begins, so the jury had a reasoned basis for concluding that Multimatic would have been the cross-

car beam supplier throughout the JS41 program’s production run.

The jury also had a sound basis for concluding that Faurecia would have selected Multimatic

as its supplier absent a breach of the confidentiality agreement. Sullivan, to repeat, testified that the

confidentiality agreement obligated Faurecia to use Multimatic as its supplier if it used Multimatic’s

design. The jury also heard testimony that, “within a few months” of November 2004, Faurecia

would have no choice but to use Multimatic’s design. ROA Tr. Vol. V at 100. It takes years,

according to Sullivan, to develop a production-ready cross-car beam, and Chrysler was nearing its

design-freeze deadline for the JS41 program, scheduled to hit showroom floors in July 2006. The

jury had a reasonable basis for finding that, by May 2005, when Faurecia breached the confidentiality

agreement and used Brown as its cross-car beam supplier, Faurecia had to use Multimatic’s design.

Taking a different tack, Faurecia argues that a Multimatic quote, which Faurecia never

accepted, cannot establish Multimatic’s lost profits. No doubt, unaccepted offers and preliminary

negotiations generally do not establish the basis for a damages award. See Wisconsin Bridge & Iron

Co. v. City of Alpena, 213 N.W. 93, 95 (Mich. 1927); ATACS Corp. v. Trans World Commc’ns, Inc.,

155 F.3d 659, 670 (3d Cir. 1998). But cf. Pelton v. Pelton, 421 N.W.2d 560, 562 (Mich. Ct. App.

1988) (using an unaccepted offer to value a business during divorce proceedings). And no doubt,

in a mine-run case, this rule makes sense because it approaches conjecture, if not enters that

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forbidden territory, to assume that both parties would agree to one party’s quote or even that both

parties would reach a final agreement. See ATACS Corp., 155 F.3d at 670.

But in this case, the jury had more to go on. The evidence showed that Faurecia had little

choice by May 2005 but to agree to Multimatic’s terms. It took no speculation for the jury to find

that Faurecia and Multimatic would have reached agreement. For if they had not, Faurecia would

have forgone the benefits of—and borne the consequences of breaching—its instrument-panel supply

agreement with Chrysler. In this setting, where there was a reasonable likelihood that the parties

would have consummated a supply agreement but for Faurecia’s breach, Multimatic’s February 2005

quote gives a contemporaneous, non-speculative indication of the price term Multimatic would have

imposed from its superior bargaining position. That is particularly so where Faurecia did not even

offer its own expert on damages.

Faurecia, lastly, challenges the sufficiency of the evidence to support the jury’s award of

$600,515 for unpaid prototype parts. Faurecia waived this argument, however, by not raising it in

its Rule 50(b) motion. It makes no difference that Faurecia mentioned that it wished to preserve the

issue for appeal in a footnote in its brief. The point of a Rule 50(b) motion is not to tell the district

court what the losing party might challenge on appeal but to give the district court a first shot at

correcting the mistake—and to give the district court an explanation for doing so. See Bldg. Serv.

Local 47 Cleaning Contractors Pension Plan v. Grandview Raceway, 46 F.3d 1392, 1398–99 (6th

Cir. 1995).

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B.

Faurecia argues in the alternative that the district court abused its discretion in making four

evidentiary rulings. See Barnes v. City of Cincinnati, 401 F.3d 729, 741 (6th Cir. 2005). First, the

district court did not exceed its authority in denying Faurecia’s discovery motion to compel

disclosure of Multimatic’s costs and profit margins on all cross-car beam programs between 2000

and 2005. Faurecia claims that it could have presented “a substantially reduced lost profits

computation” to the jury had Multimatic provided this information. Faurecia Br. at 59. A magistrate

judge denied this motion for two reasons: The request was overly broad in time and scope given that

Multimatic’s damages experts had not relied on any of this financial information in preparing their

reports, and it conflicted with a previous stipulated order withdrawing all of Faurecia’s requests for

historical pricing information. The district court agreed. A district court has broad discretion to

deny unduly broad discovery requests, see Info-Hold, Inc. v. Sound Merchandising, Inc., 538 F.3d

448, 457 (6th Cir. 2008), and this trial judge did not abuse that discretion by denying Faurecia access

to five years of tangential, sensitive financial information.

Second, the district court did not abuse its discretion by admitting Faurecia’s November 2004

pre-production letter of intent. According to Faurecia, the letter ceased having any relevance once

the district court deemed it unenforceable at the summary judgment stage. Rule 401 sets a low

threshold for relevance, however, which is to say, evidence “having any tendency to make the

existence of any” relevant fact “more [or less] probable.” Fed. R. Evid. 401. The November 2004

letter clears this threshold because it shows both parties contemplated using the pricing structure

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Simon relied upon when calculating lost-profits damages, thereby making the lost-profits calculation

more plausible. Likewise unavailing is Faurecia’s claim that the letter of intent would confuse the

jury, which might treat it as an enforceable agreement. See Fed. R. Evid. 403. The district court

instructed the jury that they could not treat the letter of intent as an enforceable agreement and

indicated it would give that instruction when it admitted the letter.

Third, Faurecia objects under Rule 702 to the admission of Simon’s expert testimony. To

be admissible, expert testimony must be relevant and “have a reliable basis in the knowledge and

experience of” the expert’s “discipline.” Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 592

(1993). Simon’s testimony is relevant because it went to the only issue before the jury: the amount

of damages suffered by Multimatic. No evidence shows that Simon’s methodology, or the way he

applied that methodology here, falls outside the range of accepted accounting principles. For the

same reasons that Multimatic’s unilateral price quote is not too speculative to support a jury verdict,

neither is Simon’s testimony based on that quote too speculative to be admissible under Rule 702.

Faurecia separately attempts to incorporate by reference arguments it made in its motion in limine

below seeking to exclude Simon’s testimony. Because Faurecia does not develop these arguments

on appeal, however, it waived them. See Bickel v. Korean Air Lines Co., Ltd., 96 F.3d 151, 153 (6th

Cir. 1996); Bldg. Serv. Local 47, 46 F.3d at 1398–99.

Fourth, Faurecia likewise failed to preserve its objection to Sullivan’s testimony about his

understanding of the confidentiality agreement by not objecting in the district court. See Bowman

v. Corrections Corp. of America, 350 F.3d 537, 548 (6th Cir. 2003).

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C.

Faurecia also claims that the district court abused its discretion by rejecting its Rule 60(b)

motion to reduce the lost-profits damage award by roughly $2.2 million. Less than a month after the

district court entered its final judgment in October 2007, Chrysler announced it would eliminate a

shift at the plant producing the JS41 program vehicles, causing industry forecasters to reduce JS41

production estimates through 2012 by thirty-one percent. Faurecia moved for Rule 60(b)(2) and

(b)(6) relief from the judgment based on this information, which the district court denied.

Faurecia does not qualify for Rule 60(b)(2) relief. Under that rule, the district court “may

relieve a party . . . from a judgment” if it uncovers “newly discovered evidence that, with reasonable

diligence, could not have been discovered in time to move for a new trial.” Fed. R. Civ. P. 60(b).

The problem is, the newly discovered evidence must relate to facts existing at the time of trial. See

Davis v. Jellico Cmty. Hosp. Inc., 912 F.2d 129, 136 (6th Cir. 1990). Faurecia offers no evidence

that this was so.

Faurecia’s request for Rule 60(b)(6) relief fails as well. District courts may grant relief under

this provision only in “extraordinary circumstances.” See Agostini v. Felton, 521 U.S. 203, 239

(1997). Events disproving a damages expert’s forward-looking estimates are not such an

extraordinary circumstance, as it is hardly unusual for future events to overtake the reasonable

premises of an estimate. See Davis, 912 F.2d at 136 (“Death of a judgment plaintiff following so

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shortly after a jury award of damages based on an expected life span not realized . . . is not the sort

of ‘extraordinary circumstances’ contemplated by Rule 60(b)(6).”).

IV.

Multimatic cross-appeals the district court’s decision to exclude testimony by its second

damages expert, Dr. Michael Hartzmark. Hartzmark, a PhD economist, would have testified that

Multimatic suffered roughly $28.7 million in additional damages beyond the $10 million Sullivan

calculated. Hartzmark formed the opinion that Faurecia’s breach of the confidentiality agreement

caused three other sources of lost profits: (1) Lost profits from a revamped JS41 program extending

from 2013 through 2018; (2) the loss of an “incumbency benefit[]” by not supplying the cross-car

beam, which reduced Multimatic’s likelihood of being a Chrysler supplier in the future by eighteen

percent, R.144 Ex. A at 4, 21–22; and (3) “price erosion”—requiring decreased profit margins—on

future GM and Ford contracts through 2016 because competitors had access to Multimatic’s designs,

ROA Tr. Vol. VII at 117, 121.

The district court excluded this evidence under Fed. R. Evid. 702 and 403, finding that

Hartzmark’s expert opinion rested on speculation and his methodology had not been scientifically

tested, had not been subject to peer review and was not generally accepted in the economic

community. We review this decision for an abuse of discretion. Gen. Elec. Co. v. Joiner, 522 U.S.

136, 138–39 (1997). In ensuring that expert testimony is “relevant and reliable” under Rule 702,

Kumho Tire Co. Ltd. v. Carmichael, 526 U.S. 137, 141, 152 (1999), district courts must ensure that

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the testimony has a “basis in the knowledge and experience of” the expert’s discipline and that the

expert exhibits “the same level of intellectual rigor” expected of an expert outside the courtroom.

Id. at 149, 152.

Consistent with this gatekeeping requirement, the district court properly excluded

Hartzmark’s testimony about lost JS41-related profits from 2013 through 2017. See McClean v.

988011 Ontario, Ltd., 224 F.3d 797, 800–01 (6th Cir. 2000). Hartzmark assumed that Chrysler

would follow standard automotive practice by revamping the JS41 program after five years and then

extend its production run through 2017. He further assumed, without any supporting industry

research, that Chrysler would continue producing JS41 vehicles at the same rate in 2017 as it did in

2007. Simon, in contrast, relied on industry research for his 2007–12 lost-profits calculations. The

district court hit the nail on the head when it characterized this ten-year prediction about the fortunes

of the American automotive industry as utterly speculative.

Hartzmark’s opinion regarding Multimatic’s loss of its “incumbency benefit[]” fares no

better. R.144 Ex. A at 21. His opinion rests on speculation about Multimatic’s profit margins on

yet-to-be-signed contracts years into the future, using Simon’s per-beam profit estimates for the

JS41 program without analyzing Multimatic’s historical profit margins or typical industry profit

margins. As mentioned, however, Simon’s calculations rested on an unaccepted price quote. That

quote did not rest on unacceptable speculation only because Multimatic had Faurecia in a position

where it had no choice but to accept Multimatic’s terms. Multimatic will not have similar bargaining

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Multimatic, Inc. v. Faurecia Interior Sys. USA, Inc.

strength for future Chrysler contracts, and in the absence of that reality we cannot fault the district

court for excluding Hartzmark’s testimony.

Hartzmark builds his “price erosion” opinion on an even shakier foundation. According to

Hartzmark, Faurecia’s breach of the confidentiality agreement eroded Multimatic’s future profits on

Ford and GM contracts by eight percent. He derived this number from the same Multimatic quote

as his incumbency-benefit calculation as well as May 2005 quotes from Brown and other suppliers.

His opinion also assumed, relying on Multimatic’s say-so, that Multimatic provides 2.15 million

cross-car beams annually to Ford and GM and that Multimatic would continue to do so through

2016. Experts may not assume facts without some support for those assumptions in their expert

report or elsewhere in the record. See McClean, 224 F.3d at 801.

Beyond being speculative, Hartzmark’s lost profit calculations fall short of the level of rigor

professional economists normally exercise. See Kumho Tire Co., 526 U.S. at 152. We doubt—and

Multimatic introduced no evidence to the contrary—that an economic projection ten years into the

future would be well-received by professional economists if no historical data backed up the

projection and the economist made no effort to test his model against historical data to confirm its

predictive power. Hartzmark’s price erosion calculation also never attempts to identify or control

for factors beyond the disclosure of Multimatic’s designs that might account for the possibility that

competitors might submit lower bids. (Some of the bidders, for example, were able to obtain steel

at lower prices.)

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Nos. 08-1332, 08-1420
Multimatic, Inc. v. Faurecia Interior Sys. USA, Inc.

Multimatic bears some of the blame for Hartzmark’s problematic analysis. He asked for

historical data, but Multimatic refused to provide it, likely because the company did not want to

disclose it during discovery. District courts do not abuse their discretion, however, when they

exclude expert testimony whose flaws stem in part from the expert’s efforts to do the best job he

could with the limited data his client would provide.

Multimatic responds that price erosion is a well-accepted economic principle and that

weaknesses in Hartzmark’s opinion go to weight, not admissibility. But the question at hand is the

reliability of Hartzmark’s application of price erosion principles, not the reliability of price erosion

as an economic principle. See Kumho Tire Co., 526 U.S. at 152. Perceived flaws in an expert’s

opinion go to weight only if they fall within the accepted norms of the discipline and have a non-

speculative basis in fact. See McClean, 224 F.3d at 800–01. Not so here.

V.

For these reasons, we affirm.

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Nos. 08-1332, 08-1420
Multimatic, Inc. v. Faurecia Interior Sys., Inc.

CLAY, Circuit Judge, dissenting. The record before this Court indicates that Defendant,

Faurecia Interior Systems, Inc. (“Faurecia”), has raised genuine issues of material fact regarding

Plaintiff’s, Multimatic, Inc.’s (“Multimatic”), claim that Faurecia breached a confidentiality

agreement between the parties. The record reflects both that the terms of the confidentiality

agreement were sufficiently ambiguous that the district court should have considered extrinsic

evidence in support of Faurecia’s interpretation, and that Multimatic may not have had exclusive

ownership of the intellectual property rights to the designs at issue. I would therefore vacate the

district court’s grant of summary judgment to Multimatic on Count I. Because the court’s summary

judgment ruling as to liability directly affected the scope of issues set down for trial, and thus

improperly narrowed the evidence and questions put to the jury, I would also vacate district court’s

procedural rulings, including the procedural rulings that are the basis for Multimatic’s cross-appeal,

as well as the court’s judgment awarding damages to Multimatic.

I.

Because this case turns primarily on whether there are genuine factual disputes and because

the majority’s recounting of the facts is lacking in some respects, the following factual summary is

presented to frame the discussion. DaimlerChrysler (“DCX” or “Chrysler”)—which is not a party

in this action—contracted with Faurecia to develop and supply the instrument panel for its JS-41

product line, which included DCX’s Sebring, Stratus, and Avenger vehicle lines. Faurecia

subcontracted the design and manufacture of the frame component of the instrument panel assembly,

known as the cross-car beam (“CCB”). One of the companies to which Faurecia considered

subcontracting the design and manufacture of the CCB was Multimatic.
Nos. 08-1332, 08-1420
Multimatic, Inc. v. Faurecia Interior Sys., Inc.

In February 2004, Faurecia and Multimatic executed a Confidentiality Agreement. (ROA

at 236-37.) The confidentiality agreement recognizes that each of the parties

possesses proprietary confidential information pertaining to its business and
customers and possess technical information relating to its products, designs and
services, including compositions, raw materials, formulations, additives, components,
production processes, plant layout, engineering concepts and designs, analysis
models and results, know-how, and other intellectual or industrial property, which
is generally not available to the public (all of such information being herein referred
to as “Sensitive Information”).

(ROA at 236 (emphasis added).) The confidentiality agreement also provides that:

Sensitive Information excludes any information that is in the public domain at the
time of disclosure, any information that has been made available to the receiving
party by third parties not acting on the disclosing party’s behalf and not breaching a
confidentiality obligation to the disclosing party and any information that the
receiving party can establish by documentary evidence was in its possession at the
time of disclosure by the disclosing party.

(ROA at 236.) In addition, the confidentiality agreement states that “[t]he receiving party agrees that

it will use the Sensitive Information of the disclosing party only in connection with the Instrument

Panel Structural Assembly Arrangement and that it will not directly or indirectly otherwise use or

exploit the Sensitive Information of the disclosing party.” (ROA at 236.)

After entering into this agreement, Multimatic worked to develop CCB designs and

prototypes for Faurecia. In April 2004, Multimatic submitted its initial design for the CCB.

Multimatic contends that this initial design iteration, as well as all other designs and prototypes

submitted to Faurecia after the parties entered into the confidentiality agreement, constituted

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Nos. 08-1332, 08-1420
Multimatic, Inc. v. Faurecia Interior Sys., Inc.

“Sensitive Information” as defined and protected by the confidentiality agreement. Along with its

designs, Multimatic also submitted an initial price quote of approximately $25 per unit, plus

approximately $2.8 million in tooling costs. As the negotiations progressed, Multimatic eventually

increased its estimated per-unit production price from $25 to $41, and increased its estimated tooling

costs to $5.2 million.

Apparently displeased with the price quotes it was receiving from Multimatic, Faurecia

conducted “market tests” to determine if Multimatic’s competitors could manufacture the CCB more

cheaply. As part of those market tests, Faurecia sent the CCB designs submitted by Multimatic to

other prospective suppliers. Faurecia shared Multimatic’s designs with multiple suppliers as part

of multiple rounds of market tests. The parties agree that Faurecia conducted these market tests

without Multimatic’s knowledge or consent.

After several months of negotiations and after Multimatic had submitted at least two CCB

designs to Faurecia, the parties executed a “Pre-Development Letter of Intent” (“LOI”) addressing

issues related to a potential supply agreement pertaining to the CCB. (ROA at 239-40.) The parties

dispute their intent in entering into the LOI. For its part, Multimatic contends that it had developed

an innovative new CCB design and insisted on a firm sourcing commitment before it submitted its

design to Faurecia. Faurecia contends that the LOI was merely an agreement to negotiate in good

faith. After the parties executed the LOI, Mutlimatic submitted its “Mass Savings Design” to

Faurecia.

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Nos. 08-1332, 08-1420
Multimatic, Inc. v. Faurecia Interior Sys., Inc.

Although Faurecia approved Multimatic’s Mass Saving Design “from an engineering

perspective” in December 2004, the parties continued to disagree over pricing issues. Negotiations

between Faurecia and Multimatic regarding manufacture and supply of the CCB continued until the

end of April 2005. During this time, Faurecia continued to conduct market tests with other

prospective suppliers, again circulating Multimatic’s designs—including the Mass Savings

Design—to at least three prospective suppliers.

After Faurecia obtained a lower price quote for the manufacture of the CCB from Brown

Corporation (“Brown”), Faurecia sought price concessions from Multimatic. When negotiations

with Multimatic failed, Faurecia awarded the JS-41 CCB supply contract to Brown. Faurecia

subsequently provided Brown with additional information submitted to Faurecia by Multimatic,

including “CAD designs, CAE models and analysis, Multimatic’s Design Failure Mode and Effects

Analysis, its Design Verification Plan & Report, and a prototype crossbeam manufactured by

Multimatic.” (ROA at 1508.)

Shortly thereafter, in May 2005, Multimatic filed this action alleging that Faurecia breached

the confidentiality agreement by sharing Multimatic’s designs and other purportedly proprietary

information with other suppliers. Multimatic also alleged breach, anticipatory repudiation, and

specific performance related to the supply “contract” reached between the parties, alleging that

“Faurecia breached the contract by refusing to award the production contract to Multimatic and

quoting or sourcing the part to an alternative supplier.” (ROA at 230.) In response, Faurecia claims

that the confidentiality agreement did not preclude Faurecia from sharing Multimatic’s CCB designs

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Nos. 08-1332, 08-1420
Multimatic, Inc. v. Faurecia Interior Sys., Inc.

and prototypes with other possible suppliers, despite Multimatic’s demand for such assurances.

Faurecia also denies that the parties ever reached a contractual agreement regarding the production

and supply of the CCB.

II.

Faurecia claims that the district court erred by granting summary judgment in favor of

Multimatic on Multimatic’s claim that Faurecia breached the confidentiality agreement by sharing

Multimatic’s CCB design and prototypes with other potential suppliers. Faurecia acknowledges that

the confidentiality agreement protects “proprietary” information that the parties possessed at the time

they entered into it, but contends that the confidentiality agreement does not address designs and

other information related to the JS-41 program that the parties generated after they executed it.

Faurecia contends that Multimatic did not have exclusive ownership of the designs because Faurecia

had contributed to the creation of the designs and had been billed by Multimatic for those designs.

Faurecia also contends that Multimatic repeatedly uploaded iterations of the its designs to Chrysler’s

information-sharing computer system, and, consequently, Multimatic has disclaimed its “proprietary”

rights to those designs.

As the majority also recognizes, the dispositive question is whether a “genuine fact as to any

material issue” exists with respect to Multimatic’s claim that Faurecia breached the confidentiality

agreement by sharing Multimatic’s designs and prototypes with other suppliers – i.e., whether the

district court properly granted summary judgment to Multimatic on liability. Certain facts are not

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Nos. 08-1332, 08-1420
Multimatic, Inc. v. Faurecia Interior Sys., Inc.

in dispute. Most importantly, Faurecia does not dispute that it shared Multimatic’s CCB design

iterations and other information with other suppliers in a series of “market tests” in 2004 and 2005.

Faurecia also does not dispute that Multimatic was unaware of these market tests. Instead, Faurecia

claims that summary judgment is improper because the terms of the confidentiality agreement do not

preclude disclosure of these particular designs because the confidentiality agreement does not cover

designs produced after the parties entered into the confidentiality agreement. Alternatively, Faurecia

argues that the designs were not exclusively owned by Multimatic and so would not fall under the

confidentiality agreement even if it did cover later-developed designs. The majority’s conclusory

findings in favor of Multimatic on both issues are ultimately unsatisfactory because the question of

liability should have gone to trial.

Under Michigan law, where the terms of a contract are unambiguous, determining its

meaning is a question of law to be resolved by the court. See G & A, Inc v. Nahra, 514 N.W.2d 255,

256 (Mich. Ct. App. 1994) (“If a contract’s language is clear, its construction is a question of law

for the court.”). In construing the meaning and scope of contract terms, “[c]ontractual language is

given its ordinary and plain meaning, and technical and constrained constructions are avoided.” Id.

Michigan law also makes clear, however, that “the main goal in the interpretation of contracts is to

honor the intent of the parties.” Mahnick v. Bell Co., 662 N.W.2d 830, 832 (Mich. Ct. App. 2003).

Therefore, “[i]f a contract is subject to two interpretations, factual development is necessary to

determine the intent of the parties and summary disposition is inappropriate.” Id. at 833.

There is no doubt that the confidentiality agreement precludes the parties from sharing

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Nos. 08-1332, 08-1420
Multimatic, Inc. v. Faurecia Interior Sys., Inc.

“Sensitive Information,” which expressly includes “engineering concepts and designs.” Faurecia

contends, however, that this provision is worded in the present tense inasmuch as it refers to

proprietary information that each party “possesses” at the time and thus the confidentiality

agreement, when properly construed, relates only to “background information,” that is, information

already possessed by the parties on the date that the parties executed the confidentiality agreement.

On Faurecia’s suggested reading, the confidentiality agreement does not preclude the parties from

sharing “foreground information,” that is, designs related to the JS-41 program that the parties

created while operating under the agreement. Although Faurecia’s suggestion that the confidentiality

agreement unambiguously relates only to “background information” is not particularly convincing,

the terms of the Confidentiality agreement are sufficiently ambiguous to preclude summary judgment

in favor of Multimatic.

The confidentiality agreement does not expressly distinguish between “background” and

“foreground” information. Rather, the confidentiality agreement protects the parties’ “proprietary

confidential information,” including “engineering concepts and designs.” Although the

confidentiality agreement does not specifically include the limitation urged by Faurecia, neither does

its terms specify that its protections relate to all engineering designs. Although Faurecia may not

carry the day with its contention that the present-tense phrasing of the confidentiality agreement

makes this limitation clear, the phrasing is ambiguous.

Additionally, while the confidentiality agreement unequivocally includes “engineering

concepts and designs” within the reach of “Sensitive Information,” the scope of that protection is

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Nos. 08-1332, 08-1420
Multimatic, Inc. v. Faurecia Interior Sys., Inc.

limited to “proprietary” information. Therefore, if, as Faurecia contends, the JS-41 designs and

engineering plans at issue here were not the “proprietary” property of Multimatic, then those designs

would not be subject to the restrictions of the Confidentiality agreement.

The question then becomes whether the designs created by Multimatic for the JS-41 program

constitute “proprietary” information owned by Multimatic. Faurecia contends that it provided

substantial input to the designs, it was billed for the design work, and that Multimatic had no

intention of claiming ownership over the designs after production had begun. Taking Faurecia’s

claims as true, as this Court must at the summary judgment stage, these factors create a genuine issue

of material fact as to the “proprietary” status of Multimatic’s designs. The terms of the

confidentiality agreement simply do not address ownership of the CCB designs that were produced

after execution of the confidentiality agreement. Absent any such language, this Court cannot simply

read the answer to this question into the parties’ agreement, no matter what the majority sees fit to

do. See Leon v. Detroit Harvester Co., 109 N.W.2d 804, 811 (Mich. 1961) (“This Court may not

vary [a contract] nor read into it some provision that the parties did not see fit to incorporate.”).

This ambiguity also can be seen in other aspects of the confidentiality agreement, including

what Faurecia aptly describes as a “unilateral ‘clawback’ provision.” That provision states:

The receiving party shall immediately upon the request of the disclosing party return
to the disclosing party the Sensitive Information of the disclosing party and all copies
thereof that may have been or may be in the receiving party’s possession upon the
request of the disclosing party or upon termination of the agreement.

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Nos. 08-1332, 08-1420
Multimatic, Inc. v. Faurecia Interior Sys., Inc.

(ROA at 1085.) If the scope of the confidentiality agreement is given the broad reading that

Multimatic, and the majority, ascribes to it, then this provision would seem to grant Multimatic the

right to clawback any previously shared designs at any time, including information designed for

Faurecia and for which Faurecia already had been billed. According to Faurecia, “[i]f this clause is

read to apply to foreground technology, i.e., the design being developed for the JS41 program, then

the confidentiality agreement would be rendered illusory because either party could claw back the

design under development at any time.” (Faurecia Br. at 28 (citing Floss v. Ryan’s Family Steak

Houses, Inc., 211 F.3d 306, 315 (6th Cir. 2000).)

This troubling implication of Multimatic’s suggested reading, which also leads the majority

astray, is heightened by the fact that the confidentiality agreement does not speak to whether the

parties could share or disclose the JS-41 designs after a supply and production contract had been

entered into. As a result, Multimatic’s reading of the confidentiality agreement would permit it to

withdraw its design plans at any time without regard for the fact that Faurecia already had paid

Multimatic for its design expenses and regardless of any reliance costs. Multimatic does not respond

to this particular argument, and the majority does not adequately address the concern. The clawback

provision thus renders the confidentiality agreement susceptible to alternative interpretations that

should have been resolved by a jury.

III.

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Nos. 08-1332, 08-1420
Multimatic, Inc. v. Faurecia Interior Sys., Inc.

Because the terms of the confidentiality agreement are ambiguous and susceptible to multiple

reasonable interpretations, the courts are obliged to give effect to the parties intentions at the time.

See Mahnick, 662 N.W.2d at 833 (“If the meaning of the language [of a contract] is unclear, the trier

of fact must determine the intent of the parties.”). “Where a contract provides little guidance in

interpreting a disputed term,” the courts “may properly look to . . . the standards and practices within

the relevant industry and to how the parties’ actions during the pendency of the agreement have

reflected an understanding of the term.” City of Wyandotte v. Conrail, 262 F.3d 581, 586 (6th Cir.

2001) (citing Booth v. N. Am. Aluminum Corp., 423 F.2d 545, 547 (6th Cir.1970), and William C.

Roney & Co. v. Fed. Ins. Co., 674 F.2d 587, 590 (6th Cir. 1982)); see also Meagher v. Wayne State

Univ., 565 N.W.2d 401, 415 (Mich. Ct. App. 1997) (“Parol evidence . . . may be admissible to prove

the existence of an ambiguity and to clarify the meaning of an ambiguous contract.”) The district

court should have considered relevant information related to the parties’ understanding of whether

Multimatic’s designs in fact were proprietary given that Faurecia had input into the designs and the

work performed by Multimatic’s design team was billed to Faurecia. (See ROA at 1292, 1301-26.)

Under Michigan law, parol evidence is admissible not only to resolve an ambiguity, but also

to prove that a latent ambiguity exists in the contract when the language of the contract may appear

otherwise unambiguous. See City of Grosse Pointe Park v. Michigan Municipal Liability and

Property Pool, 702 N.W.2d 106, 113 (Mich.,2005) (“Because ‘the detection of a latent ambiguity

requires a consideration of factors outside the instrument itself, extrinsic evidence is obviously

admissible to prove the existence of the ambiguity, as well as to resolve any ambiguity proven to

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Nos. 08-1332, 08-1420
Multimatic, Inc. v. Faurecia Interior Sys., Inc.

exist.’”) (quoting McCarty v. Mercury Metalcraft Co., 127 N.W.2d 340, 344 (Mich. 1964)); see also

In re Kramek Estate, 710 N.W.2d 753, 758 (Mich.Ct. App. 2005). Extrinsic evidence has been used

to show that common contract terms that appear unambiguous were latently ambiguous because they

were intended to be given a slightly different meaning than they are typically given in the

commercial context. See Staniszewski v. Grand Rapids Packaging Corp., 336 N.W.2d 10, 11 (Mich.

Ct. App. 1983) (“full back pay” typically unambiguously refers to the industry standard 40-hour

work week but parol evidence indicated that the plaintiff’s usual 52-hour work week was intended).

In the instant case, the district court should have considered Faurecia’s contention that the term

“possesses” only referred to the present situation, a plausible use of the ordinary meaning of the

word, rather than to the future, as Multimatic argued and the majority concluded. Faurecia raises

genuine issues of material fact as to whether the intent of the parties was for the confidentiality

agreement to only cover background information, and whether the CCB designs were “proprietary”

under the terms of the agreement, regardless of the temporal scope of the agreement.

The majority claims to be convinced that record unequivocally demonstrates that “Multimatic

exclusively owned” the designs that Faurecia shared with Brown. (Maj. Op. at 8). From that

conclusion, the majority argues that Multimatic did not lose its copyright ownership simply by

uploading its designs to Chrysler’s VPN. If the majority were correct that the record is so clear as

to the ownership of the designs, then its dismissal of Faurecia’s argument regarding Multimatic’s

use of the VPN would be potentially convincing. However, since Faurecia has raised a genuine issue

of material fact as to the proprietary nature of the designs – shared input into the designs and billing

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Nos. 08-1332, 08-1420
Multimatic, Inc. v. Faurecia Interior Sys., Inc.

the costs of the designs to Faurecia are key pieces of evidence as to which company owned the

intellectual property rights to those designs that weigh in favor of Faurecia’s argument – the majority

seems to have missed the forest for the trees. Uploading the designs to the VPN would not impact

Multimatic’s copyright ownership if it were settled that Multimatic was indeed the copyright owner.

Because the record is not so clear, the question of ownership – i.e., whether the designs were

“proprietary” – should have gone to trial.

Because genuine issues of material fact exist, the district court should not have granted

summary judgment and the majority should not have upheld that ruling. See Mahnick, 662 N.W.2d

at 833 (“Because the contract is subject to more than one reasonable interpretation, factual

development is necessary to determine the intent of the parties and summary disposition is

inappropriate.”).

I therefore respectfully dissent.

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