David Schwartz v. Rent A Wreck of America Incorporated

UNPUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 10-2114

DAVID SCHWARTZ, d/b/a Rent A Wreck; RENT A WRECK
INCORPORATED, d/b/a Bundy Auto Sales,

Plaintiffs - Appellees,

v.

RENT A WRECK OF AMERICA INCORPORATED; BUNDY AMERICAN LLC,

Defendants – Appellants,

and

J.J.F. MANAGEMENT SERVICES INCORPORATED,

Defendant.

No. 10-2260

DAVID SCHWARTZ, d/b/a Rent A Wreck; RENT A WRECK
INCORPORATED, d/b/a Bundy Auto Sales,

Plaintiffs - Appellants,

v.

RENT A WRECK OF AMERICA INCORPORATED; BUNDY AMERICAN LLC,

Defendants – Appellees,

and

J.J.F. MANAGEMENT SERVICES INCORPORATED,

Defendant.
 No. 11-1561

DAVID SCHWARTZ, d/b/a Rent A Wreck; RENT A WRECK
INCORPORATED, d/b/a Bundy Auto Sales,

Plaintiffs - Appellees,

v.

RENT A WRECK OF AMERICA INCORPORATED; BUNDY AMERICAN LLC,

Defendants – Appellants,

and

J.J.F. MANAGEMENT SERVICES INCORPORATED,

Defendant.

Appeals from the United States District Court for the District
of Maryland, at Baltimore. Peter J. Messitte, Senior District
Judge. (1:07-cv-01679-PJM)

Argued: January 26, 2012 Decided: March 9, 2012

Before KING and DUNCAN, Circuit Judges, and J. Michelle CHILDS,
United States District Judge for the District of South Carolina,
sitting by designation.

Affirmed in part, vacated in part, reversed in part, and
remanded by unpublished opinion. Judge Duncan wrote the
opinion, in which Judge King and Judge Childs joined.

ARGUED: Daniel Janssen, QUARLES & BRADY, Milwaukee, Wisconsin,
for Rent A Wreck of America Incorporated and Bundy American LLC.
Jacob Ira Weddle, GORDON & SIMMONS, LLC, Frederick, Maryland,
for David Schwartz and Rent A Wreck Incorporated. ON BRIEF:
Leah J. Stoecker, QUARLES & BRADY, Milwaukee, Wisconsin, for

2
Rent A Wreck of America Incorporated and Bundy American LLC.
Roger C. Simmons, GORDON & SIMMONS, LLC, Frederick, Maryland,
for David Schwartz and Rent A Wreck Incorporated.

Unpublished opinions are not binding precedent in this circuit.

3
DUNCAN, Circuit Judge:

These consolidated appeals arise out of a jury verdict that

a contract arose based upon a course of dealing between

appellants/cross-appellees Rent-A-Wreck of America, Inc.

(“RAWA”) and Bundy American, LLC (“Bundy”) on the one hand, and

appellees/cross-appellants David Schwartz and Rent-A-Wreck, Inc.

(“RAWI”), on the other, with respect to RAWI’s and Schwartz’s

operation of a used car rental business in West Los Angeles,

California. Both sets of parties moved to set aside certain

portions of the jury verdict under Rule 50(b). The district

court granted in part and denied in part these motions. The

district court then entered a partial judgment in favor of RAWI

and Schwartz, from which both sets of parties appeal.

Subsequently, upon motion by RAWI and Schwartz, the district

court ordered RAWA and Bundy to comply with certain directives.

RAWA and Bundy appealed from that order. 1 For the reasons that

follow, we affirm in part, vacate in part, reverse in part, and

remand for further proceedings.

1
The appeal from the district court’s first order, dated
September 23, 2010, was docketed as No. 10-2114. The appeal
from the district court’s second order, dated May 11, 2011, was
docketed as No. 11-1561. By order of this court, the two
appeals were consolidated.

4
 I.

A.

We begin by setting forth the facts relevant to this

appeal. In 1962, Schwartz began operating a used car lot under

the name of Bundy Auto Sales. In 1973, Schwartz began using the

name Rent-A-Wreck. Schwartz painted a sign with the name “Bundy

Rent-A-Wreck” and placed it outside his business. Two years

later, in 1975, Schwartz incorporated under the name Rent-A-

Wreck, Inc. On May 13, 1977, Schwartz formed another new

company with an investor named Geoffrey Nathanson. The name of

the new company, owned equally between Schwartz and Nathanson,

was Bundy American Corporation (“Bundy”). Bundy was formed for

the purpose of offering Rent-A-Wreck brand auto rental

franchises.

In March and April of 1977, shortly before Schwartz and

Nathanson formed Bundy, they had entered into an agreement that

provided that all of Schwartz’s and RAWI’s interests in the

Rent-A-Wreck name and marks would be assigned to Bundy; that

Schwartz would assign to Bundy his and RAWI’s rights to the

Rent-A-Wreck name; that the territory of Los Angeles County was

excepted from this assignment; and that the agreement would be

binding upon both parties and their respective heirs, executors,

administrators, and permitted assigns (the “1977 Agreement”).

5
On May 13, 1977, Schwartz, for himself and RAWI, executed a

written assignment of the Rent-A-Wreck service mark to Bundy

(the “1977 Assignment”).

In 1985, Schwartz and Nathanson, with the agreement of

Bundy’s franchisees, decided to take Bundy public under the name

Rent-A-Wreck of America, Inc. For this purpose, they entered

into an agreement (the “1985 Agreement”). Pursuant to the 1985

Agreement, Schwartz agreed that “I shall not engage in any

activities that compete with the business of [RAWA], except

activities in the protected territory described below, including

the running of my Bundy Rent-A-Wreck operation in West Los

Angeles.” J.A. 2939 (¶ 3). The 1985 Agreement further

identified a defined territory--located within Los Angeles--

within which Schwartz could continue operating a single car

rental location (called Bundy Rent-A-Wreck). RAWA agreed that

it would grant no franchises, nor open any RAWA-owned or

affiliated operations in Schwartz’s protected territory. The

1985 Agreement further provided that it would terminate on June

30, 1985, except that the exclusivity provision would continue

in full force and effect after that date.

On August 12, 1985, RAWA’s offering prospectus was issued

(the “Prospectus”). It stated, in relevant part, that “[i]n

connection with the formation of Bundy, Schwartz assigned all of

his right, title and interest in and to the trade name and

6
trademark ‘Rent-A-Wreck’ to Bundy, retaining the right to the

concurrent use of the trade name and trademark at the original

Rent-A-Wreck facility owned by him in West Los Angeles.” J.A.

2883 (“Background”). It further stated, in relevant part, that

Schwartz was “the originator of the Rent-A-Wreck concept and has

operated Bundy Rent-A-Wreck, his West Los Angeles based Rent-A-

Wreck facility, the nation’s first, since 1973. Bundy Rent-A-

Wreck operates independently of, and not under a license

agreement from [RAWA].” J.A. 2889. The Prospectus further

noted the existence and terms of the 1985 Agreement.

On August 11, 1987, the RAWA board unanimously approved a

proposal that RAWA would lease and operate Schwartz’s business

and territory in West Los Angeles beginning for an initial term

of one year, with the option for four additional one year lease

terms. In an agreement executed on September 1, 1987, RAWA

agreed to lease and operate Schwartz’s car rental business (the

“1987 Lease Agreement”). During the lease period, RAWA replaced

Schwartz’s original Bundy Rent-A-Wreck sign with a stylized

Rent-A-Wreck sign and logo identical to the ones used by RAWA

franchisees. On May 20, 1988, RAWI assigned the Rent-A-Wreck

mark in the State of California to Bundy (the “1988

Assignment”). Schwartz signed the 1988 Assignment, in his

capacity as the President of RAWI. In 1990, Schwartz sold his

controlling interest in RAWA.

7
 In September 1990, RAWA terminated the lease on Schwartz’s

car rental location, and Schwartz resumed operating an

independent rental car business at the same location. Schwartz

continued using the signage and business forms that RAWA had

left behind at the end of the lease term. RAWA tolerated

Schwartz’s use of its marks for the next sixteen years. 2 Over

time, new employees of RAWA even began including his location on

Uniform Franchise Offering Circulars (“UFOC”) 3 and, when RAWA

established an internet page, it included reference to his

location. The 2001 and 2002 UFOCs state that Schwartz “has

operated a vehicle rental business under the Rent-A-Wreck name

since 1973. This business is located in Los Angeles, California

and operates under a royalty-free agreement.” J.A. 1544

(Information for Prospective Franchisees, July 1, 2001); J.A.

1744 (Information for Prospective Franchisees, July 1, 2002).

Each UFOC attached as an exhibit a “List of Current

Franchisees,” which included Schwartz. J.A. 1676-77; J.A. 1823-

24. Nonetheless, there has never been a formal franchise

agreement executed between RAWA and Schwartz. The relationship

2
In 1993, RAWA relocated its headquarters from California
to Maryland.
3
A UFOC is a document that contains information franchisors
must provide to franchisees by law. The Federal Trade
Commission regulates the contents of a UFOC.

8
between the two is therefore somewhat unorthodox. RAWA imposes

certain requirements upon its franchisees, including ongoing

training; compliance with standards and policies; restrictions

on products and services offered; warrant and customer service

requirements; sales quotas; maintenance, appearing, and

remodeling requirements; insurance; and advertising. Schwartz’s

rental location does not abide by such requirements.

In 2001, Bundy, now operating as a wholly owned subsidiary

of RAWA, began to operate auto rental businesses within the Los

Angeles area under the name “Priceless.” There are currently

Priceless brand franchises operating in Los Angeles and West

Hollywood.

In 2005, RAWA entered into negotiations with J.J.F.

Management Services, Inc. (“JJFM”) to sell itself. That sale

was completed in 2006. While the sale was pending, Schwartz

filed two lawsuits against RAWA, challenging the sale. On

October 28, 2006, RAWA wrote to him, asking that he either

provide evidence of any agreement to use the Rent-A-Wreck name,

or to stop holding himself out to the public as a RAWA

franchisee (the “October 2006 letter”). In June 2007, RAWA

removed Schwartz from its website.

9
 B.

On June 25, 2007, Schwartz and RAWI filed an action against

RAWA, Bundy, and JJFM 4 in the United States District Court for

the District of Maryland. 5 RAWI and Schwartz 6 sought a

declaratory judgment in their favor pursuant to the terms of the

1985 Agreement, which they alleged gave them a royalty-free

franchise; specific performance of the 1985 Agreement; and

breach of an implied-in-fact contract, which appellees alleged

arose from the parties’ course of dealings between 1977 and

2007. RAWA and Bundy 7 filed an answer and counterclaims. As

relevant here, appellants’ counterclaims included a request for

a declaration that the exclusive franchise sought by appellees

4
JJFM was dismissed from the action on March 25, 2009, and
is not a party to this appeal.
5
On September 7, 2007, RAWI and Schwartz filed a First
Amended Complaint, alleging, inter alia, violations of the
Lanham Act and seeking cancellation of RAWA’s marks. The
district court dismissed both of those claims. The operative
complaint in this action is the Second Amended Complaint, filed
on October 9, 2008.
6
As already noted, RAWI and Schwartz are appellees in both
appeals before us, but they are also cross-appellees in the
first appeal. For ease of readability, we will refer to them as
“appellees” throughout our opinion, unless specifically noted
otherwise.
7
As already noted, RAWA and Bundy are appellants in both
appeals before us, but they are also cross-appellants in the
first appeal. For ease of readability, we will refer to them,
unless otherwise specifically noted, as “appellants” throughout
our opinion.

10
was unenforceable as an unlawful restraint on trade. They

further sought a declaration that the 1985 Agreement could be

terminated by appellants, or in the alternative, that appellants

had already terminated all of appellees’ rights in the October

2006 letter.

The parties’ claims were tried to a jury from April 1, 2010

through April 13, 2010. At the close of evidence, the district

court instructed the jury regarding applicable legal principles,

including breach of contract and duration of contracts.

Appellants requested that the district court instruct the jury

with respect to the law of assignment. Appellants’ proposed

instruction stated that an assignor may not maintain an action

upon a claim after making an absolute assignment of the claim to

another, and that if the jury found that appellees assigned to

appellants the right to use the Rent-A-Wreck name or associated

marks in 1988, it should reject appellees’ claim that the 1985

Agreement grants them the right to use the Rent-A-Wreck name and

also reject appellees’ claim that an implied contract grants

them that right. Appellants further requested an instruction

regarding the law of warranties of assignment. Finally,

appellants requested an instruction regarding the law of

contract termination, which would have required the jury, in the

event it found that a contract existed, to examine whether the

contract had an express, or implied, term of duration. If the

11
jury were to find that no term was agreed upon, appellants’

proposed instruction was that the term of such a contract is a

reasonable time given the circumstances and purpose under which

the contract arose. The district court declined to give

appellants’ proposed instructions.

After the jury was unable to reach a unanimous verdict, the

parties agreed to accept a majority verdict. The jury’s verdict

was in the form of answers to questions on a verdict form. In

relevant part, the jury responded to those questions as follows:

[Question No. 1]: Do you find that [appellees], based
on a course of dealing, have an express or implied
contract, written or oral, with [appellants], with
respect to [appellees’] operation of a used car rental
business in West Los Angeles

[Answer to Question No. 1]: Yes

[Question No. 3]: If your answer to Question 1 is
‘yes,’ check which, if any, of the following are
features of such contract:

[First subpart of Question No. 3]: RAWA Franchise in
favor of [appellees]

[Answer to first subpart of Question No. 3]: Yes

[Second subpart of Question No. 3]: Exclusive RAWA
franchise in favor of [appellees] in West Los Angeles
as delineated in or after 1985.

[Answer to second subpart of Question No. 3]: Yes

[Third subpart of Question No. 3]: Whether or not as
a franchisee, the right of [appellees] to use trade
name and trademark Rent-A-Wreck, and receive same
benefits as franchisees without the obligations

[Answer to third subpart of Question No. 3]: No

12
 [Fourth subpart of Question No. 3]: Rights of
[appellees] to any of the foregoing without paying
fees or royalty to RAWA

[Answer to fourth subpart of Question No. 3]: No

[Fifth subpart of Question No. 3]: Existence of any
of the foregoing rights in favor of [appellees] in
perpetuity

[Answer to fifth subpart of Question No. 3]: No

[Question No. 4]: If these rights were not in
perpetuity, what would be a reasonable time for the
rights to last? (indicate duration)

[Answer to Question No. 4]: Rest of his life

J.A. 3108a-b.

The remaining questions on the verdict form concerned the

appellants’ counterclaims:

[Question No. 5]: Did [appellants] or their
predecesors in interest ever expressly authorize
[appellees] to use the Rent-A-Wreck trade name and
trademark?

[Answer to Question No. 5]: Yes

[Question No. 6]: With reference to the foregoing
question, did the [appellants] or their predecessors
in interest ever implicitly authorize [appellees] to
use the Rent-A-Wreck trade name and trademark?

[Answer to Question No. 6]: Yes

[Question No. 7]: If you find that [appellants] or
their predecessors in interest either expressly or
implicitly authorized [appellees] to use the Rent-A-
Wreck trade name and trademarks, did [appellants]
expressly or implicitly reserve the right to terminate
that use by [appellees]?

13
 [Answer to Question No. 7]: No

[Question No. 10]: Do you find that the [appellees]
and [appellants], or [appellants’] predecessors in
interest, entered into a written contract or contracts
in 1977 and 1988, which [appellees] have breached?

[Answer to Question No. 10]: No

J.A. 3108b-c.

Following the verdict, appellees filed a Rule 50(b) motion.

Specifically, appellees requested that a judgment

notwithstanding the verdict be entered as follows: (1) appellees

were entitled to the same benefits as other RAWA franchisees,

but were not required to fulfill the franchise obligations of

other RAWA franchisees; (2) appellees had no obligation to pay

royalties or fees to RAWA; and (3) appellees had perpetual

rights under the contract. Appellants also filed a Rule 50(b)

motion. Appellants requested that a judgment notwithstanding

the verdict be entered rejecting all of appellees’ claims. They

further requested a judgment notwithstanding the verdict on

their counterclaims.

On September 23, 2010, the district court granted a partial

judgment notwithstanding the verdict under Rule 50(b) in favor

of appellees and denied appellants’ Rule 50(b) motion. In

making its ruling on the parties’ motions, the district court

first noted that “[o]ne prominent issue in this case has been

whether the jury’s responses to the Special Interrogatories

14
submitted at the close of trial are binding upon the Court or

merely advisory.” J.A. 3247. The district court then attempted

to dispose of this issue as follows: “First, insofar as the

[jury’s] findings are merely advisory, the Court reaches

contrary conclusions based on its own consideration of the

evidence. Alternatively, insofar as those jury[] findings are

binding, the Court grants Plaintiff’s Renewed Motion for

Judgment and their Motion for Judgment Notwithstanding the

Verdict as to those particular findings.” J.A. 3249.

The district court went on to hold that appellees were

entitled to a royalty-free franchise with an exclusive territory

in West Los Angeles, California, for the duration of Schwartz’s

life. The district court further held that appellees were not

subject to any of the same franchise obligations as other

franchisees operating in the RAWA network of franchises were.

Appellants filed a notice of appeal on September 29, 2010.

Appellees filed a notice of cross-appeal on October 23, 2010.

On November 30, 2010, the district court clarified that

appellees’ territory was exclusive not only as to other Rent-A-

Wreck franchises, but also franchises operating under the

Priceless name and marks, for which, as discussed above, Bundy,

a wholly owned subsidiary of RAWA, is franchisor.

While the cross-appeals were pending before us, appellees

moved, in relevant part, to enforce the district court’s final

15
order of declaratory judgment. Specifically, they sought

certain directives from the court regarding the presentation of

appellees on appellants’ website. The district court treated

the motion as one for clarification of the district court’s

final order of declaratory judgment. On May 11, 2011, the

district court issued a memorandum opinion, ordering appellants

to make certain alterations to their website pursuant to the

district court’s September 23, 2010 order. RAWA and Bundy filed

an additional notice of appeal, including their objections to

this order, on May 25, 2011.

II.

On appeal, the parties raise a plethora of arguments. At

the outset, appellants contend that we must vacate and remand

because the district court treated the jury’s verdict as

advisory and was required to make specific findings under Rule

52(a), which it failed to do.

As an alternative to their Rule 52 argument, appellants

argue that the district court erred in denying their Rule 50(b)

motion pertaining to the jury’s finding of the existence of a

contract, as well as its specific features. Specifically,

appellants contend that the district court should have set aside

the jury’s verdict that appellees have a contract based on a

course of dealing with appellants, that appellants had not

16
reserved the right to terminate their relationship with

appellees, and that appellees had an exclusive territory. As to

the exclusivity provision, appellants contend that it is void ab

initio under California law. Appellants further contend that

the district court erred in setting aside the jury’s verdict

that appellees’ contract entitled them neither to receive the

same benefits as franchisees without the obligations of

franchisees, nor to receive such benefits without paying fees or

royalties to appellants. On cross-appeal, appellees contend

that the district court should have granted their Rule 50(b)

motion to set aside the jury’s verdict that appellees’ rights

under the contract exist for the duration of Schwartz’s life,

and that the court should instead have ruled that those rights

are perpetual.

Turning to the remaining issues on appeal, appellants make

three additional arguments. They contend that the district

court improperly held that the implied contract found by the

jury gave appellees the right to operate exclusively within West

Los Angeles, not only of other Rent-A-Wreck franchises, but also

of auto rental franchises operated by appellants under a

different trade name, including the Priceless franchises that

have coexisted with Schwartz’s rental location for over a

decade. They further challenge certain jury instructions given

17
by the district court. 8 Also, on cross-appeal, appellees assert

that the district court erred in denying their request for

attorneys’ fees. We address each issue in turn.

A.

We first address appellants’ challenge under Federal Rule

of Civil Procedure 52. Appellants argue that the district court

treated the jury’s findings as advisory, and was therefore

required to “find the facts specially and state its conclusions

of law separately.” Fed. R. Civ. P. 52(a)(1). They further

contend that the district court failed to do so here.

In relevant part, Rule 52(a) provides that:

In an action tried on the facts without a jury or with
an advisory jury, the court must find the facts
specially and state its conclusions of law separately.
The findings and conclusions may be stated on the
record after the close of the evidence or may appear
in an opinion or a memorandum of decision filed by the
court.

It is well established that “[t]he Federal Rule 52(a)

requirement that the trial court find the facts specially and

state separately its conclusions of law is mandatory and must be

fairly observed by district judges.” 9 C. Wright & A. Miller,

8
Finally, appellants challenge the district court’s May 11,
2011 order directing them to modify their website. We vacate
the May 11, 2011 order in light of our ruling on the appeal from
the September 23, 2010 order. We remand to the district court
for reexamination of the May 11, 2011 order in light of this
decision.

18
Federal Practice and Procedure § 2574 (3d ed. 2008). By

contrast, Rule 50(b) does not require the district court to make

specific findings of fact or law. If a district court tries an

action with an advisory jury, and the parties nonetheless file

motions under Rule 50(b), the proper course of action for the

district court is to decline to adjudicate the Rule 50(b)

motions, and instead consider the arguments in the context of

the court’s determination of whether to adopt the advisory

jury’s findings. As an example, in Wooten v. Lightburn, 579 F.

Supp. 2d 769 (W.D. Va. 2008), although the defendant had filed a

Rule 50(b) motion, the court declined to rule on that motion

because the case was tried before an advisory jury, with the

ultimate decision left to the district court. Id. at 772.

Instead, the Wooten court considered the parties’ arguments

under Rule 52(a). Id.

Here, in contrast, the district court did not determine

that the action was tried with an advisory jury, and did not

make the specific findings of fact or law required by Rule 52.

Instead, the district court adjudicated the parties’ Rule 50(b)

motions. To the extent it denied the parties’ Rule 50(b)

motions, it held that there was a legally sufficient evidentiary

basis for the jury’s verdict. To the extent it granted the

parties’ Rule 50(b) motions, it held that there was not a

legally sufficient evidentiary basis for the jury’s verdict. In

19
either event, the district court was treating the jury’s

findings as binding. Therefore, we reject appellants’ argument,

and proceed to address the remaining issues on appeal.

B.

Both parties challenge the district court’s denial of their

Rule 50(b) motions. We review the denial of a Rule 50(b) motion

de novo. First Union Commercial Corp. v. GATX Capital Corp.,

411 F.3d 551, 556 (4th Cir. 2005). We affirm, “[i]f, viewing

the facts in the light most favorable to the non-moving party,

there is sufficient evidence for a reasonable jury to have found

in the [non-moving party’s] favor.” Id. (alteration in

original) (citation omitted). We address the district court’s

Rule 50(b) rulings in the following order: (1) the sufficiency

of the jury finding of an implied contract between the parties;

(2) the sufficiency of the jury finding that appellants did not

reserve their right to terminate; (3) whether the exclusivity

provision is void ab initio under California law; (4) the

sufficiency of the jury finding with respect to franchise

obligations; and (5) the sufficiency of the jury finding with

respect to royalties and fees.

1.

Appellants argue that as a matter of law, there is no

contract, express or implied, between the parties. Schwartz

could not possibly have been a party to an exclusive franchise

20
agreement with RAWA, they contend, because he had signed away

any and all of his interest in the Rent-A-Wreck name by virtue

of the 1977 Assignment and the 1988 Assignment.

Under California law, 9 the interpretation of a contract

presents an issue of law when the language of the contract is

unambiguous, i.e., “clear and explicit.” F.B.T. Prods., LLC v.

Aftermath Records, 621 F.3d 958, 963-64 (9th Cir. 2010); accord

Porkert v. Chevron Corp., No. 10-1384, 2012 WL 90142, at *4 (4th

Cir. Jan. 12, 2012) (“Under California law, the interpretation

of a contract presents an issue of law when the language of a

contract is unambiguous.”). Parol evidence is properly admitted

to construe a contract only when its language is ambiguous.

F.B.T. Prods., 621 F.3d at 963. “When the contract is

unambiguous, ‘[n]o obligation can be implied, which would result

9
We are a federal court sitting in diversity, and must
apply the substantive law of the state in which the district
court sits, which in this case is Maryland. “Under Maryland
choice-of-law rules, a contractual claim (including a claim for
an implied contract) is governed by the law of the place where
the contract is made, which is the place where the last act
required to make a contract binding occurs.” Harte-Hanks Direct
Mktg./Baltimore, Inc. v. Varilease Techn. Fin. Gr., Inc., 299 F.
Supp. 2d 505, 518 n.13 (D. Md. 2004). As we discuss herein, the
jury found a contract based on a course of dealing between the
parties that began no later than 1985. Neither party has
pointed to any conduct post-dating 1993 (the year in which RAWA
relocated its corporate headquarters to Maryland) that was
required to make the contract binding. In view of these facts,
we hold that the last act required to make the contract, based
on the course of dealing, binding occurred prior to 1993. As
such, California law governs the contract.

21
in the obliteration of a right expressly given under a written

contract.’ ” Thrifty Payless, Inc. v. Mariners Mile Gateway,

LLC, 111 Cal. Rptr. 3d 173, 182 (Cal. Ct. App. 2010) (quoting

Gerlund v. Elec. Dispensers Int’l, 235 Cal. Rptr. 279, 286 (Cal.

Ct. App. 1987)).

In addition to express contracts, California law also

recognizes implied contracts. Retired Emps. Ass’n of Orange

Cnty., Inc. v. County of Orange, No. S184059, 2011 WL 5829598,

at *2 (Cal. Nov. 21, 2011).

The terms of an express contract are stated in words.
The existence and terms of an implied contract are
manifested by conduct. The distinction reflects no
difference in legal effect but merely in the mode of
manifesting assent. Accordingly, a contract implied
in fact consists of obligations from a mutual
agreement and intent to promise where the agreement
and promise have not been expressed in words.

Even when a written contract exists, evidence derived
from experience and practice can now trigger the
incorporation of additional, implied terms. Implied
contractual terms ordinarily stand on equal footing
with express terms provided that, as a general matter,
implied terms should never be read to vary express
terms.

Id. (citations and quotation marks omitted). “Whether the

parties’ conduct creates such implied agreements is generally a

question of fact.” Scott v. Pac. Gas & Elec. Co., 904 P.2d 834,

839 (Cal. 1995) (quotation marks omitted). However, “the law

does not recognize implied contract terms that are at variance

with the terms of the contract as expressly agreed or as

22
prescribed by statute.” County of Orange, 2011 WL 5829598, at

*4 (quotation marks omitted).

Turning to the facts before us, we must first determine

whether a reasonable jury could have found that an implied

contract existed based on a course of dealing between appellants

and appellees. If we answer that question in the affirmative,

we must proceed to analyze whether the terms of the implied

contract found by the jury are at variance with the terms of any

preexisting contract between the parties.

First, viewing the facts in the light most favorable to

appellees, we conclude that there was sufficient evidence for a

reasonable jury to have found in appellees’ favor as to the

existence of an implied contract. Notably, the record is

replete with evidence that appellants treated appellee Schwartz

as a de facto franchisee between 1990 (when RAWA terminated its

lease of Schwartz’s rental location) and 2005 (when Schwartz

began acting in an adverse manner toward RAWA). As already

noted, appellants stated in official company documents that

Schwartz was operating under the Rent-A-Wreck name pursuant to a

royalty-free agreement and listed Schwartz as one of their

current franchisees. Under our deferential standard of review,

this evidence creates sufficient factual basis for the jury’s

finding of an implied contract.

23
 Second, we hold that the terms of the implied contract

found by the jury are not at variance with the terms of any

preexisting contract between the parties. Notably, the jury did

not make any specific finding regarding whether the implied

contract constituted additional terms in a preexisting express

contract between the parties, or whether it was an independent

implied contract. Under either construction, however, we

believe the jury’s verdict passes muster. Appellants point to

the 1977 Assignment and 1988 Assignment as extinguishing all of

appellees’ rights to use the Rent-A-Wreck mark. However,

neither of those agreements contains any language regarding

whether appellees could continue to use the trade name and

trademark at the original Rent-A-Wreck facility. The 1985

Agreement, on the other hand, postdates the 1977 Assignment, and

specifically provides that Schwartz retains, for an indefinite

period, the right to the concurrent use of the trade name and

trademark at the original Rent-A-Wreck facility owned by him in

West Los Angeles. Thus, nothing in either the 1977 Assignment

or 1988 Assignment specifically precludes Schwartz from

continuing to use the Rent-A-Wreck mark at his West Los Angeles

location, and the 1985 Agreement gives him precisely that right

for an indefinite period.

In sum, we hold that a reasonable jury could have concluded

that appellees had an implied contract with appellants with

24
respect to appellees’ operation of a used car rental business in

West Los Angeles.

2.

Appellants contend that, as a matter of law, any franchise

agreement between the parties ended in 2006 and could not have

continued to exist thereafter. California courts engage in a

three-stage inquiry to determine the duration of a contract.

McCaskey v. California State Auto. Ass’n., 118 Cal. Rptr. 3d 34

(Cal. Ct. App. 2010), provides that:

[T]he court first consults the terms of the contract;
then the circumstances and other indicia of intent;
and only when those steps fail to establish a
durational term does the court impose a judicially
determined “reasonable time” limitation on the duty at
issue. This last step is a manifestation of the
broader principle that when any essential term has
been omitted from the contract, and the parties’
intent concerning that term cannot otherwise be
ascertained, the law will supply a reasonable term.

Id. at 49-50 (emphasis omitted). Here, the first step is not

applicable because the jury found an implied contract. The

second step seeks to ascertain the parties’ intent from

circumstantial evidence. Here, the jury did just that, and

determined that the duration of the contract is the remainder of

Schwartz’s life. As already noted, the jury had a great deal of

evidence to rely upon in determining the terms of the implied

contract, including its duration. Notably, the 1985 Agreement

contains a provision permitting Schwartz to continue to operate

25
his car rental business at the West Los Angeles location. It

was not unreasonable for the jury to have concluded that the

parties’ conduct subsequent to the 1985 Agreement was consistent

with this provision, and that the parties’ intent was to

preserve Schwartz’s right to use the Rent-A-Wreck name for the

duration of his life. 10

Appellants’ argument that the duration shall be a

“reasonable time” fails. Because the first two steps have

prescribed a durational term under California law, there is no

need to impose a judicially determined “reasonable time”

limitation on the parties’ rights under the contract.

3.

Appellants next contend that, as a matter of law, any

implied provision giving Schwartz and RAWI the right to operate

exclusively within the territory delineated in the 1985

Agreement is void ab initio under California Business and

Professions Code § 16600.

Section 16600 prescribes that “[e]xcept as provided in this

chapter, every contract by which anyone is restrained from

10
It therefore follows that the district court did not err
in denying appellees’ Rule 50(b) motion in this regard. There
was sufficient evidence for the jury to conclude that the course
of the dealings between the parties created an implied contract
that gave Schwartz rights for the duration of his lifetime,
rather than an indefinite duration.

26
engaging in a lawful profession, trade or business of any kind

is to that extent void.” This is a codification of the “general

rule in California [that] covenants not to compete are void.”

Hill Med. Corp. v. Wycoff, 103 Cal. Rptr. 2d 779, 784 (Cal. Ct.

App. 2001). 11 The California Supreme Court has held that

“[s]ection 16600 is unambiguous, and if the Legislature intended

the statute to apply only to restraints that were unreasonable

or overbroad, it would have included language to that effect.”

Edwards v. Arthur Andersen LLP, 189 P.3d 285, 293 (Cal. 2008).

At the same time, as the Ninth Circuit recently noted,

California courts construing § 16600 have differentiated between

“post-contract” covenants and “in-term” covenants. See Comedy

Club, Inc. v. Improv West Assocs., 553 F.3d 1277, 1291 (9th Cir.

2009) (discussing California case law). In Dayton Time Lock

Serv., Inc. v. Silent Watchman Corp., 124 Cal. Rptr. 678 (Cal.

Ct. App. 1975), for example, a California appellate court

addressed an in-term “exclusive dealing clause” in a franchise

11
There are two statutory exceptions to § 16600. Sections
16601 and 16602 permit broad covenants not to compete in two
situations: where a person sells the goodwill of a business and
where a partner agrees not to compete in anticipation of
dissolution of a partnership. Appellees argue that § 16601 is
applicable here because the 1985 Agreement “was by definition a
sale”--a contention in support of which they offer no supporting
authority. Appellees’ Br. 53. We note that the jury found an
implied franchise agreement, which would not constitute a sale
under any definition. We therefore conclude that neither of the
statutory exceptions is applicable here.

27
agreement, and held that “[e]xclusive dealing contracts are not

necessarily invalid,” but “[t]hey are proscribed when it is

probable that performance of the contract will foreclose

competition in a substantial share of the affected line of

commerce. A determination of illegality requires knowledge and

analysis of the line of commerce, the market area, and the

affected share of the market.” Id. at 682 (emphasis added)

(citation omitted). Under California law, this is a question of

fact. See Fisherman’s Wharf Bay Cruise Corp. v. Superior Court,

7 Cal. Rptr. 3d 628, 649-52 (Cal. Ct. App. 2003) (reversing

grant of summary judgment because a triable issue of fact

existed as to whether exclusive dealing foreclosed competition

in a substantial share of the affected market). A California

appellate court recently noted that Dayton’s conclusion that

exclusive dealing contracts were sometimes permissible in the

context of a franchise relationship was based on the

franchisor’s need to “maintain some control over the

franchisee.” Kelton v. Stravinski, 41 Cal. Rptr. 3d 877, 882

(Cal. Ct. App. 2006). The Ninth Circuit has construed Dayton

and Kelton as follows:

Dayton Time Lock and Kelton make evident that under []
§ 16600 an in-term covenant not to compete in a
franchise-like agreement will be void if it
“foreclose[s] competition in a substantial share” of a
business, trade, or market. Also, California courts
are less willing to approve in-term covenants not to
compete outside a franchise context because there is

28
 not a need to protect and maintain [the franchisor's]
trademark, trade name and goodwill.

Comedy Club, Inc., 553 F.3d at 1292 (alteration in original)

(emphasis added) (citations and quotations omitted).

Interpreting § 16600 in light of the case law yields the

conclusion that an in-term exclusive dealing agreement in the

context of a franchising agreement does not run afoul of §

16600, provided that it does not foreclose competition in a

substantial share of the market. In applying Dayton 12 and Kelton

to this case, we conclude that appellees are entitled to the

exclusive territory provision if two circumstances can be met:

(1) the implied contract found by the jury is a franchising

agreement, whereby RAWA can maintain some control as is

necessary to protect its trademark, trade name, and goodwill;

and (2) the exclusivity arrangement does not foreclose

12
Appellants urge us to read Arthur Andersen as overruling
Dayton, arguing that Arthur Andersen’s reasoning precludes the
creation or application of judicially created exceptions to §
16600. Although that argument is not without merit, Arthur
Andersen did not specifically overrule Dayton or Kelton, nor has
it been so construed by any California court. Additionally, the
Ninth Circuit’s decision in Comedy Club postdates Arthur
Andersen. In sum, we do not believe that the Ninth Circuit
“disregarded clear signals emanating” from the California
Supreme Court “pointing to a different rule,” and therefore
defer to its interpretation of California law. Mellon Bank,
N.A. v. Ternisky, 999 F.2d 791, 796 (4th Cir. 1993) (quoting
Factors Etc., Inc. v. Pro Arts, Inc., 652 F.3d 278, 283 (2d Cir.
1981)); see id. (deferring to Third Circuit’s interpretation of
Pennsylvania law).

29
competition in a substantial share of the affected line of

commerce.

Appellants contend that the first requirement is not met

here to the extent the district court ruled that appellees do

not have to comply with any franchisee obligations. We agree.

However, because, as discussed below, we reverse the district

court’s grant of appellees’ Rule 50(b) motion with regard to

that issue, we proceed to the second requirement.

Following Fisherman’s Wharf, we conclude that the question

of whether the exclusive territory at issue would foreclose

competition in a substantial share of the market for rental cars

is a question of fact for the jury. This issue was not

presented to the jury. Accordingly, we vacate the district

court’s denial of appellants’ Rule 50(b) motion in this regard,

and instruct the district court to submit to a jury the question

of whether the exclusive territory provision forecloses

competition in a substantial share of the market for rental

cars. 13

13
Appellees argue that even if they are not entitled to the
exclusivity provision under California law, they have an
implied-in-fact contract under Maryland law. Because RAWA
relocated its headquarters to Maryland in 1993, they contend,
any course of dealing between the parties thereafter giving rise
to a contract implied in fact occurred in Maryland. We are not
persuaded by this argument. As already noted, we believe
California law applies to the implied contract found by the
jury. It bears further note that the exclusivity provision is
(Continued)
30
 4.

We next turn to the district court’s grant of appellees’

Rule 50(b) motion requesting a judgment that although they are

entitled to the benefits afforded to other RAWA franchisees,

they do not have the obligations of other RAWA franchisees. On

appeal, we must determine whether, viewing the facts in the

light most favorable to appellants, there was sufficient

evidence for the jury to conclude that appellees were required

to fulfill the same obligations as other RAWA franchisees. We

conclude that there was such a basis for the jury’s finding

because appellants listed Schwartz as a current franchisee on

the UFOCs. It was reasonable for the jury to conclude that the

implied agreement was a franchise agreement, with the attendant

benefits and obligations, whether or not appellees were actually

in compliance with their franchisee obligations. The jury was

also free to draw a contrary inference, of course; however, we

do not believe the district court was correct to hold that this

was only permissible inference. 14

derived from the 1985 Agreement, which was made in California.
We therefore reject appellees’ argument in this regard.
14
It bears note that if we were to uphold the district
court’s judgment that appellees were not required to fulfill the
same obligations as other RAWA franchisees, the grant of an
exclusive territory to appellees would be void ab initio under §
16600. As already discussed, appellees are entitled to the
(Continued)
31
 5.

We now turn to appellants’ final Rule 50(b) challenge: that

the district court erred in setting aside the jury’s verdict

that the contract between the parties did not provide a royalty-

free franchise. On appeal, we must determine whether, viewing

the facts in the light most favorable to the nonmoving party,

there was sufficient evidence for the jury to conclude that

appellees were required to pay royalties pursuant to the implied

contract. We conclude that there was no such basis for the

jury’s finding because appellants specifically stated in their

UFOCs that Schwartz was operating under a royalty-free

agreement. Notably, appellants point to no evidence in the

record that could support a reasonable inference that appellants

ever asked appellees for any fees or royalties. Absent such

evidence, we conclude that a reasonable jury could not have

interpreted the course of dealing between the parties to require

exclusive territory provision under California law only if the
implied contract found by the jury is a franchising agreement,
whereby appellants can maintain some control as is necessary to
protect their trademark, trade name, and goodwill. Under the
district court’s order, appellants have no control over
appellees’ use of their trademark, trade name, or goodwill, and
appellees would therefore not be entitled to the exclusive
territory provision.

32
payment of fees or royalties. Therefore, we affirm the district

court’s grant of appellees’ Rule 50(b) motion on this ground.

C.

Having resolved the parties’ respective challenges to the

district court’s Rule 50(b) rulings, we turn to the remaining

issues on appeal, beginning with appellants’ contention that the

district court erred in precluding Priceless--a subsidiary of

RAWA that operates its own locations within Schwartz’s exclusive

territory--from operating within Schwartz’s territory.

Specifically, they argue that (1) there was no evidence

presented at trial to justify this outcome, and (2) that

Priceless and its franchisee were necessary and indispensable

parties under Rule 19. Because we are persuaded that the

contract implied by the jury could not have contained any terms

relating to Priceless or other auto rental businesses operating

under anything other than the Rent-A-Wreck name and marks, we

vacate the district court’s judgment in this regard, and order

the district court to enter a judgment that excludes Priceless.

As already discussed, the jury found a contract based on

the course of dealings between the parties with respect to

appellees’ operation of a used car rental business in West Los

Angeles. The jury further found an exclusive RAWA franchise in

favor of appellees in West Los Angeles as delineated in or after

1985. The jury did not find, nor was it asked to, whether the

33
contract between the parties precluded RAWA from opening any

RAWA-owned or affiliated operations in West Los Angeles that

were not operating under the “Rent-A-Wreck” name. Therefore,

any finding by the district court that RAWA or its affiliates

are bound by the specific provisions of the 1985 Agreement in

that regard cannot be supported by the jury verdict.

Moreover, the jury’s verdict was based on the course of

dealings between the parties. It is undisputed that this course

of dealing included the coexistence in West Los Angeles--for

over a decade--of both Schwartz’s business and the Priceless

franchises. As such, even if this question were before the

jury, it could not have concluded that the exclusivity provision

of the implied contract foreclosed the continued operation of

the Priceless franchises.

D.

We next address appellants’ contention that the district

court erred in failing to give certain jury instructions

proffered by them. Specifically, appellants contend that the

district court should have given its proffered instructions

regarding the law of assignment, the law of warranties of

assignment, and the law of termination of contracts of

indefinite duration. We review jury instructions under an abuse

of discretion standard, which we have explained as follows:

34
 We review jury instructions holistically and through
the prism of the abuse of discretion standard. . . .
[A] single instruction to a jury may not be judged in
artificial isolation, but must be viewed in the
context of the overall charge. . . . Accordingly, we
simply determine whether the instructions construed as
a whole, and in light of the whole record, adequately
informed the jury of the controlling legal principles
without misleading or confusing the jury to the
prejudice of the objecting party.

The party challenging the jury instructions faces a
heavy burden, for we accord the district court much
discretion to fashion the charge. . . A district court
will be reversed for declining to give an instruction
proposed by a party only when the requested
instruction (1) was correct; (2) was not substantially
covered by the court's charge to the jury; and (3)
dealt with some point in the trial so important, that
failure to give the requested instruction seriously
impaired that party's ability to make its case.

Noel v. Artson, 641 F.3d 580, 587 (4th Cir. 2011) (emphasis

added).

With respect to their proposed instruction on the law of

assignment, appellants argue that without instructing the jury

on the legal ramifications of the 1977 Assignment and the 1988

Assignment, the jury could not properly consider RAWA’s defense-

-that any contract, including the purported 1985 Agreement,

could not create a franchise relationship. We reject this

argument for two reasons. First, the district court instructed

the jury regarding appellants’ breach of contract claim, and

also permitted appellants to argue that the 1988 Assignment was

dispositive of Schwartz’s claims as a matter of law. More

significantly, however, the proposed instruction is incorrect:

35
as already discussed, the jury could have found an implied

franchise agreement notwithstanding the assignments.

Accordingly, the district court did not err in failing to give

the appellants’ proposed assignment instruction.

Appellants have also failed to demonstrate that their

proposed instruction with respect to the law of warranties of

assignment--based on the Restatement (Second) of Contracts §

333(1)--dealt with some point in the trial so important that

failure to give the requested instruction seriously impaired

their ability to make their case. 15 Appellants sought that

instruction to advance their allegation that Schwartz, in spite

of the assignments, repeatedly averred that RAWA did not own the

Rent-A—Wreck marks, and that these actions caused it to incur

attorneys’ fees that were properly an element of damages that

could have resulted from a breach of warranties. However, as

appellees point out, the Restatement (Second) of Contracts § 333

(1981), provides that “when a warranty of an assignor is broken,

the assignee is entitled to the usual remedies for breach of a

contract.” Id., cmt. d. Notably, California subscribes to the

American Rule, under which parties cannot generally recover

15
It is also doubtful whether the instruction is legally
correct. Appellants argue that it was legally correct because
it was based on the Restatement (Second) of Contracts § 333(1),
but they acknowledge that California has not yet accepted that
section of the Restatement.

36
attorneys’ fees. See Kim v. Euromotors West/The Auto Gallery,

56 Cal. Rptr. 3d 780, 785 (Cal. Ct. App. 2007). Thus, even if

the district court had provided the jury with appellants’

proposed instruction, it would not have aided appellants’ cause.

Finally, as to their proposed instruction on the law of

contract termination, appellants contend that the district

court’s actions meant that the jury could not have properly

considered RAWA’s affirmative defense--that any franchise

agreement between RAWA and Schwartz was terminable on reasonable

notice. Here, too, appellants’ argument fails. As already

discussed, the duration of an implied agreement is a question of

fact under California law, to be determined by a jury. The

district court properly instructed the jury, in relevant part,

that “[i]f you happen to find that there was an understanding,

but there was no understanding as to the duration, then you

would have to indicate what an appropriate duration was.” J.A.

1274. This instruction differed from appellants’ proposed

instruction only in that it did not use the “reasonable time”

language. Functionally, however, there is scant difference

between “appropriate duration” and “reasonable time.” Thus, the

appellant’s proposed instruction was substantially covered by

the district court’s charge to the jury.

37
 In sum, the district court did not abuse its discretion in

refusing to provide any of the three instructions advanced by

appellants.

E.

Finally, we address appellees’ challenge to the district

court’s order denying their motion for attorneys’ fees under

section 35(a) of the Lanham Act. They argue that in so doing,

the district court incorrectly applied a bad faith standard.

Appellees further contend that the district court’s factual

findings were clearly erroneous because they were “spitefully

held hostage” by appellants’ trademark infringement

counterclaim. Appellees’ Br. 68. Appellants contend that the

district court applied the correct standard, and in the

alternative, that any error was harmless because appellees have

failed to meet the applicable standard.

“[I]n exceptional cases,” the Lanham Act permits the award

of “reasonable attorney fees to the prevailing party.” 15 U.S.C.

§ 1117(a). The statute does not define what qualifies as an

“exceptional case.” “We have defined the ‘exceptional case’ as

one in which ‘the defendant’s conduct was malicious, fraudulent,

willful or deliberate in nature.” Retail Servs., Inc. v.

Freebies Publ’g, 364 F.3d 535, 550 (4th Cir. 2004) (quoting

People for the Ethical Treatment of Animals v. Doughney, 263

F.3d 359, 370 (4th Cir. 2001)). In this circuit, we employ a

38
 dual standard of proof upon prevailing plaintiffs and
defendants. A prevailing plaintiff seeking attorney
fees must demonstrate that the defendant acted in bad
faith. However, when an alleged infringer is the
prevailing party, he can qualify for an award of
attorney fees upon a showing of something less than
bad faith by the plaintiff.

Id. (citations and quotation marks omitted). “Some pertinent

considerations for judging a plaintiff’s (or counterclaim

plaintiff’s) conduct when the defendant prevails include

economic coercion, groundless arguments, and failure to cite

controlling law. Thus, the focus tends to be on the plaintiff’s

litigation conduct or pre-litigation assertion of rights.” Id.

at 550-51. “The question, however, is not whether snippets of

the record or isolated arguments clearly lack merit. We must

determine, in light of the entire case, whether defendants’

claims and assertions were so lacking in merit that the action

as a whole was ‘exceptional.’ ” Id. at 551.

Here, the district court stated, in relevant part: “I’m not

sure how I conclude that [appellants] acted in bad faith in any

way or otherwise . . . put forward a totally groundless claim.”

Supp. J.A. 59. It further stated that appellants were “entitled

to test the legitimacy of the [trademark infringement] claim,”

that appellants played “hard ball” with Schwartz, and that

“they’re entitled to do that. That’s what happens in the

commercial world.” Supp. J.A. 67-68.

39
 We conclude that although the district court did not

specifically address the “something less than bad faith”

standard, its conclusions that appellants did not put forward a

totally groundless claim and that their actions were not beyond

the norm of commercial dealing satisfy the applicable legal

standard. Moreover, even under the lesser standard, we do not

believe that appellees have demonstrated clear error. Notably,

they have merely cited snippets of conversation in support of

their argument, see Appellees’ Br. 69 (describing a conversation

between Schwartz and the holder of a controlling interest in

RAWA), which we have specifically held insufficient under the

“something less” standard.

III.

For the foregoing reasons, we affirm the district court’s

judgment in part, vacate it in part, reverse it in part, and

remand for further proceedings. To summarize, we reject the

appellants’ Rule 52 challenge. With respect to the Rule 50(b)

challenges, we affirm the district court’s judgment that there

existed an implied contract based on a course of dealing between

the parties with respect to Schwartz and RAWI’s operation of a

used car rental business in West Los Angeles; that Schwartz and

RAWI are not required to pay royalties or fees to RAWA or Bundy;

and that the parties’ rights under the contract shall last for

40
the duration of Schwartz’s life. We vacate the district court’s

denial of RAWA and Bundy’s Rule 50(b) motion seeking judgment as

a matter of law that the grant of an exclusive franchise within

Los Angeles to Schwartz and RAWI is void ab initio under

California law. We hold that the question of whether an

exclusive territorial provision forecloses competition in a

substantial share of the market of the affected line of

commerce--which, if answered in the affirmative, would void the

exclusivity provision under California law--is a factual

question; therefore, remand is required to permit a factfinder

to make that factual finding. In the event that the exclusive

territory provision is valid, we nonetheless reverse the

district court’s judgment that the provision operates to

prohibit the Priceless entities from operating within Schwartz’s

and RAWI’s territory. We further reverse the district court’s

judgment that RAWI and Schwartz are entitled to the benefits of

other RAWA franchisees but do not have the same obligations as

those franchisees. Instead, we reinstate the jury’s verdict

that Schwartz and RAWI cannot obtain such benefits unless they

agree to fulfill the same obligations as other RAWA franchisees.

With regard to the remaining issues on appeal, we reverse the

district court’s judgment that the implied contract found by the

jury requires the Priceless entities to cease operations within

appellees’ exclusive territory. We affirm the district court’s

41
decision not to give appellant’s proposed jury instructions. We

also affirm the district court’s denial of appellees’ motion for

attorneys’ fees. Finally, we vacate the district court’s May

11, 2011 order in light of our decision today.

AFFIRMED IN PART,
VACATED IN PART,
REVERSED IN PART,
AND REMANDED

42