Case: 15-60132 Document: 00513328396 Page: 1 Date Filed: 01/04/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 15-60132 FILED
January 4, 2016
Lyle W. Cayce
POWERTRAIN, INCORPORATED, a Mississippi Corporation, Clerk
Plaintiff - Appellant
v.
JOYCE MA, individually,
Defendant - Appellee
Appeal from the United States District Court
for the Northern District of Mississippi
USDC No. 1:11-CV-105
Before SMITH, WIENER, and GRAVES, Circuit Judges.
PER CURIAM:*
This case concerns a business dispute between Powertrain, Incorporated,
and Joyce Ma, individually. On appeal, Powertrain argues that the district
court improperly excluded deposition testimony and that the district court’s
entry of judgment as a matter of law was improper. For the following reasons,
we AFFIRM.
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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No. 15-60132
PROCEDURAL HISTORY AND FACTS
The United States Department of Justice, Environmental and Natural
Resource Division, filed a complaint against Powertrain and its sister
companies related to Powertrain’s importation of a large number of small
engines from China. Thereafter, the United States and Powertrain entered
into a consent decree requiring Powertrain and its sister companies to pay civil
penalties to the United States in the amount of $2,000,000.00, plus interest
along with the cost of implementing an emission reduction program.
Powertrain also agreed to destroy or export any remaining subject engines in
its inventory.
Powertrain sued claiming that Best Machinery & Electrical, Inc. (“Best”)
and Ma should be held responsible for the damages Powertrain incurred in the
suit by the United States against Powertrain. Although the extent of Ma’s
involvement is contested, it is undisputed that Ma helped find Chinese
manufacturers who could supply the products Powertrain wanted.
Zhao Lei incorporated Best in 2002 in California. 1 After a few months,
Zhao Lei sold the company to his father, Zhao Agen. Before trial, Ma moved in
limine to exclude the introduction of the deposition testimony of Zhao Lei and
Zhao Agen. Those depositions were taken in the case of Powertrain, Inc., et al.
v. American Honda Motor Co., Inc., Civil Action No. 1:03CV668MD (N.D.
Miss.) (the “Honda litigation”). The district court granted the motion in limine
because the previous action did not involve the same subject matter or parties.
Powertrain was not prohibited from using the depositions for impeachment
purposes at trial.
1 Zhao Lei and Ma lived together, but she testified that she is not married.
2
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Best failed to answer Powertrain’s complaint and the district court
entered a default judgment against Best for $2,600,000.00, plus interest.
Powertrain proceeded against Ma for any individual liability she might have
had in the manufacture, sale, and importation of the engines sold to
Powertrain. Specifically, Powertrain contends that Ma represented that the
engines would meet the Environmental Protection Agency emissions
standards set out in the Clean Air Act and the Code of Federal Regulations.
After a day and a half of trial, Powertrain rested its case and Ma moved
for dismissal of the claims asserted against her. Ma testified that at no point
in time had she ever had an ownership stake in Best, nor did she ever serve as
a shareholder, officer, or director. She also testified that Best paid corporate
taxes, employee wages, payroll taxes, and had its own corporate offices and
bank account―separate from her personal bank account. The district court
granted judgment as a matter of law in favor of Ma.
STANDARD OF REVIEW
“We must first review the trial court’s evidentiary rulings under an
abuse of discretion standard.” Curtis v. M&S Petroleum, Inc., 174 F.3d 661,
667-68 (5th Cir. 1999) (citing General Electric Co. v. Joiner, 522 U.S. 136, 118
S.Ct. 512, 139 L.Ed.2d 508 (1997)). Second, this court “reviews de novo a
motion for directed verdict, applying the same standard as the district court.”
X Technologies, Inc. v. Marvin Test Sys., Inc., 719 F.3d 406, 411 (5th Cir. 2013)
(citing Arthur J. Gallagher & Co. v. Babcock, 703 F.3d 284, 292–93 (5th Cir.
2012)). “‘If the facts and inferences point so strongly and overwhelmingly in
favor of one party that the Court believes that reasonable men could not arrive
at a contrary verdict, granting of the motion[ ] is proper.’” Id. (quoting Boeing
Co. v. Shipman, 411 F.2d 365, 374 (5th Cir. 1969) (en banc), overruled on other
grounds by Gautreaux v. Scurlock Marine, Inc., 107 F.3d 331 (5th Cir. 1997)
(en banc)).
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ANALYSIS
I. Deposition Testimony of Zhao Lei and Zhao Agen
The first issue is whether the district court properly refused to allow
Powertrain to use as evidence the deposition testimony of Zhao Lei and Zhao
Agen. Powertrain did not sue or depose either of the two individuals. Instead,
Powertrain attempted to introduce their July 2007 deposition testimony from
the Honda litigation. Rule 32 of the Federal Rules of Civil Procedure provides:
(a) Using Depositions.
(1) In General. At a hearing or trial, all or part of a deposition
may be used against a party on these conditions:
(A) the party was present or represented at the taking
of the deposition or had reasonable notice of it;
(B) it is used to the extent it would be admissible under
the Federal Rules of Evidence if the deponent were
present and testifying; and
(C) the use is allowed by Rule 32(a)(2) through (8).
Powertrain contends that Zhao Lei and Zhao Agen’s prior testimony is
admissible. 2 Although Rule 32 permits deposition testimony from a prior
proceeding to be introduced into a later proceeding in limited circumstances,
the Fifth Circuit has stated that “[a] deposition may not be introduced into the
record at a trial or hearing for any purpose unless the witness is unavailable
or exceptional circumstances justify its admission.” Jauch v. Corley, 830 F.2d
2Powertrain contends that Zhao Lei and Zhao Agen’s prior testimony is admissible
pursuant to Federal Rules of Civil Procedure 32(a)(3), (4), and (8). The district court
specifically rejected Powertrain’s arguments as to 32(a)(3) and (a)(4) because neither were
raised until after trial in its motion for a new trial. Indeed, Powertrain’s Memorandum of
Law in Support of its Response to Ma’s Motion in Limine specifically only mentions Rule
32(a)(8). Therefore, the court will only review Powertrain’s 32(a)(8) motion as the other
arguments were waived. See Henry’s Marine Serv., Inc. v. Fireman’s Fund Ins. Co., 193 F.
App’x 267, 277 (5th Cir. 2006) (quotations omitted) (citing Simon v. U.S., 891 F.2d 1154, 1159
(5th Cir. 1990) (“These [Rule 59] motions cannot be used to raise arguments which could, and
should, have been made before the judgment issued. Moreover, they cannot be used to argue
a case under a new legal theory.”)).
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47, 49–50 (5th Cir.1987); accord Battle ex rel. Battle v. Mem’l Hosp. at Gulfport,
228 F.3d 544, 554 (5th Cir. 2000).
Federal Rule of Civil Procedure 32(a)(8) regarding depositions taken in
earlier actions provides:
A deposition lawfully taken and, if required, filed in any federal-
or state-court action may be used in a later action involving the
same subject matter between the same parties, or their
representatives or successors in interest, to the same extent as if
taken in the later action. A deposition previously taken may also
be used as allowed by the Federal Rules of Evidence.
FED. R. CIV. P. 32(a)(8). The district court determined that Powertrain could
not introduce the depositions under Rule 32(a)(8) because the depositions were
taken in an action involving different parties with different motives and the
action involved different issues. The Honda litigation did not involve the “same
parties” because Powertrain filed that suit in anticipation of a future lawsuit
by Honda against it for allegedly infringing on Honda’s trademark. Honda filed
a countersuit against Best, Ma, and others alleging that they infringed upon
the Honda trademark. Thus, Ma was sued by Honda and not Powertrain.
Moreover, the district court noted that the Honda litigation presented
trademark infringement issues. In contrast, the present case presents claims
stemming from Ma’s alleged involvement with Best and Powertrain in the
import and sale of certain engines that allegedly violated EPA standards.
Furthermore, Ma did not have the opportunity to cross-examine or otherwise
structure the content of the inquiry of either deponent in the Honda litigation.
Thus, the use of the testimony would be fundamentally unfair. Accordingly,
the district court did not abuse its discretion in preventing Powertrain from
utilizing the depositions for purposes other than impeachment.
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II. Judgment as a Matter of Law
The second issue is whether the district court properly granted judgment
as a matter of law at the conclusion of the presentation of Powertrain’s case in
chief at trial. On a Rule 50(a) motion, “[t]he court may render judgment where
a party has been heard and there is no legally sufficient evidentiary basis for
a reasonable factfinder to find for the party on that issue.” Bass v. City of
Jackson, 540 F. App’x 300, 301 (5th Cir. 2013) (per curiam) cert. denied, 134 S.
Ct. 1940, 188 L. Ed. 2d 961 (2014) (citing Ellis v. Weasler Eng’g Inc., 258 F.3d
326, 337 (5th Cir. 2001). 3
“Corporate veil claims are analyzed under state law,” which in this case
is Mississippi law. Penn Nat’l Gaming v. Ratliff, 954 So.2d 427, 431 (Miss.
2007) (citing United States v. Bestfoods, 524 U.S. 51, 61–63, 118 S.Ct. 1876,
141 L.Ed.2d 43 (1998)). “Piercing the corporate veil is ‘[t]he judicial act of
imposing personal liability on otherwise immune corporate officers, directors,
and shareholders for the corporation’s wrongful acts.’” Tanfield Eng’g Sys., Inc.
v. Thornton, 97 So. 3d 694, 698 n.9 (Miss. 2012) (citing Black’s Law Dictionary
3 Rule 50(a) of the Federal Rules of Civil Procedure provides:
(a) Judgment as a Matter of Law.
(1) In General. If a party has been fully heard on an issue during a jury
trial and the court finds that a reasonable jury would not have a legally
sufficient evidentiary basis to find for the party on that issue, the court
may:
(A) resolve the issue against the party; and
(B) grant a motion for judgment as a matter of law against the
party on a claim or defense that, under the controlling law, can
be maintained or defeated only with a favorable finding on that
issue.
(2) Motion. A motion for judgment as a matter of law may be made at
any time before the case is submitted to the jury. The motion must
specify the judgment sought and the law and facts that entitle the
movant to the judgment.
FED. R. CIV. P. 50.
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1184 (8th ed. 2007)). The Supreme Court of Mississippi has said that it
“decline[s] to pierce the corporate veil except in those extraordinary factual
circumstances where to do otherwise would subvert the ends of justice.” Ratliff,
954 So. 2d at 431 (citing Gray v. Edgewater Landing, Inc., 541 So. 2d 1044,
1046 (Miss. 1989)). The Mississippi Supreme Court also held:
[T]o cause a court to disregard the corporate entity and justify
shareholder liability, the complaining party must demonstrate: (a)
some frustration of contractual expectations regarding the party
to whom he looked for performance; (b) the flagrant disregard of
corporate formalities by the defendant corporation and its
principals; (c) a demonstration of fraud or other equivalent
misfeasance on the part of the corporate shareholder.
Gen. Motors Acceptance Corp. v. Bates, 954 F.2d 1081, 1085 (5th Cir. 1992)
(quoting Gray, 541 So. 2d at 1047). “‘[A] party must present some credible
evidence on each of these points’ before the issue of whether to pierce the
corporate veil may go to the jury.” Id. (quoting Gray, 541 So. 2d at 1047). Here,
Powertrain failed to produce sufficient evidence to suggest that Ma was
anything more than an employee of Best. Powertrain failed to show that Best
disregarded corporate formalities and Powertrain failed to provide evidence of
fraud or malfeasance.
Powertrain also contends that Ma was individually liable for negligence,
breach of warranty (express and implied), liability under the Clean Air Act, 4
and breach of contract, regardless of the court’s ruling as to its piercing of the
corporate veil theory. The Mississippi Supreme Court has noted, however, that
“[i]ndividual liability of corporate officers or directors may not be predicated
merely on their connection to the corporation but must have as their
foundation individual wrongdoing.” Hardy v. Brock, 826 So. 2d 71, 75 (Miss.
4 Powertrain does not make a claim under the Clean Air Act’s citizen-suit provision,
42 U.S.C. § 7604, but instead seeks, without merit, to impose direct, personal liability under
the act.
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2002) (quoting Turner v. Wilson, 620 So. 2d 545, 548 (Miss. 1993)). The
Mississippi Supreme Court also noted that “[t]he prior holdings of this Court
are consonant with the great weight of authority elsewhere to the effect that,
in contract actions, the corporate fiction will not be disregarded in cases of
simple negligence.” Gray, 541 So. 2d at 1047 (citing Kaites v. Dept. of Envtl.
Res., 529 A.2d 1148, 1151 (Pa. Commw. Ct. 1987)). Powertrain submitted
insufficient evidence to suggest that Ma’s conduct exceeded negligence.
Therefore, the district court properly granted judgment as a matter of law.
CONCLUSION
For the foregoing reasons, the judgment of the district court is
AFFIRMED.
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