Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
06/16/2017 09:12 AM CDT
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Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
ACI WORLDWIDE CORP. v. BALDWIN HACKETT & MEEKS
Cite as 296 Neb. 818
ACI Worldwide Corp., a Nebraska corporation,
appellant, v. Baldwin H ackett &
Meeks, Inc., et al., appellees.
___ N.W.2d ___
Filed June 9, 2017. No. S-16-358.
1. Motions to Vacate: Proof: Appeal and Error. An appellate court will
reverse a decision on a motion to vacate or modify a judgment only if
the litigant shows that the district court abused its discretion.
2. Motions for New Trial: Appeal and Error. An appellate court reviews
a trial court’s ruling on a motion for a new trial for abuse of discretion.
3. Pretrial Procedure: Appeal and Error. Decisions regarding discovery
are directed to the discretion of the trial court and will be upheld in the
absence of an abuse of discretion.
4. Verdicts: Appeal and Error. When reviewing a jury verdict, the appel-
late court considers the evidence and resolves evidentiary conflicts in
favor of the successful party.
5. Verdicts: Juries: Appeal and Error. A jury verdict may not be set
aside unless clearly wrong, and it is sufficient if there is competent
evidence presented to the jury upon which it could find for the success-
ful party.
6. Trial: Expert Witnesses: Appeal and Error. A trial court’s ruling in
receiving or excluding an expert’s testimony which is otherwise relevant
will be reversed only when there has been an abuse of discretion.
7. Judgments: Words and Phrases. An abuse of discretion occurs when a
trial court’s decision is based upon reasons that are untenable or unrea-
sonable or if its action is clearly against justice or conscience, reason,
and evidence.
8. Attorney Fees: Appeal and Error. When an attorney fee is authorized,
the amount of the fee is addressed to the trial court’s discretion, and its
ruling will not be disturbed on appeal absent an abuse of discretion.
9. Appeal and Error. To be considered by an appellate court, an error
must be both specifically assigned and specifically argued in the brief of
the party asserting the error.
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Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
ACI WORLDWIDE CORP. v. BALDWIN HACKETT & MEEKS
Cite as 296 Neb. 818
10. Trade Secrets: Pretrial Procedure. There is no talismanic procedure
for trade secret discovery that may be used to obtain the best results in
any given case.
11. ____: ____. In determining whether a party’s trade secret information
should be discoverable, the moving party’s need for the trade secret
information must be weighed against the injury that disclosure might
cause the party opposing the discovery.
12. Torts: Parties. Under the doctrine established by Eastern R. Conf. v.
Noerr Motors, 365 U.S. 127, 81 S. Ct. 523, 5 L. Ed. 2d 464 (1961), and
Mine Workers v. Pennington, 381 U.S. 657, 85 S. Ct. 1585, 14 L. Ed. 2d
626 (1965), a party is protected from tort liability for the act of filing
a lawsuit.
13. Torts. The doctrine established by Eastern R. Conf. v. Noerr Motors,
365 U.S. 127, 81 S. Ct. 523, 5 L. Ed. 2d 464 (1961), and Mine Workers
v. Pennington, 381 U.S. 657, 85 S. Ct. 1585, 14 L. Ed. 2d 626 (1965),
does not protect a party from liability for the act of filing a “sham”
lawsuit. A lawsuit is a “sham” if it is both (1) objectively baseless in the
sense that no reasonable litigant could expect success on the merits and
(2) subjectively motivated by bad faith.
14. Pleadings. An affirmative defense raises new matters which, assuming
the allegations in the petition to be true, constitutes a defense to the
merits of a claim asserted in the petition.
15. ____. The doctrine established by Eastern R. Conf. v. Noerr Motors, 365
U.S. 127, 81 S. Ct. 523, 5 L. Ed. 2d 464 (1961), and Mine Workers v.
Pennington, 381 U.S. 657, 85 S. Ct. 1585, 14 L. Ed. 2d 626 (1965), is
an affirmative defense.
16. Vendor and Vendee. For purposes of the Junkin Act, monopolization
consists of two elements: (1) the possession of monopoly power in the
relevant market and (2) the willful acquisition or maintenance of that
power as distinguished from growth or development as a consequence
of a superior product, business acumen, or historic accident.
17. ____. The existence of monopoly power ordinarily is inferred from the
seller’s possession of a predominant share of the market.
18. Vendor and Vendee: Damages. Despite the broad remedial language of
the Junkin Act, not every person claiming an injury from a Junkin Act
violation can recover damages.
19. Vendor and Vendee: Damages: Proof. To recover damages, a plaintiff
must prove an antitrust injury. To constitute an antitrust injury, the injury
must reflect the anticompetitive effect of the violation or the anticom-
petitive effects of anticompetitive acts made possible by the violation.
20. Vendor and Vendee. Actual anticompetitive effects include, but are
not limited to, reduction of output, increase in price, or deterioration
in quality.
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Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
ACI WORLDWIDE CORP. v. BALDWIN HACKETT & MEEKS
Cite as 296 Neb. 818
21. Contracts: Appeal and Error. The interpretation of a contract is a
question of law, in connection with which an appellate court has an
obligation to reach its conclusions independently of the determinations
made by the court below.
22. Contracts. When the terms of a contract are clear, they are to be
accorded their plain and ordinary meaning.
23. Trial: Expert Witnesses: Appeal and Error. There is no exact stan-
dard for fixing the qualifications of an expert witness, and a trial court
is allowed discretion in determining whether a witness is qualified to
testify as an expert. Unless the court’s finding is clearly erroneous, such
a determination will not be disturbed on appeal.
24. Trial: Expert Witnesses. Experts or skilled witnesses will be consid-
ered qualified if they possess special skill or knowledge respecting the
subject matter involved superior to that of persons in general, so as to
make the expert’s formation of a judgment a fact of probative value.
25. Trial: Rules of Evidence: Expert Witnesses. A witness may qualify as
an expert by virtue of either formal training or actual practical experi-
ence in the field.
26. Damages: Evidence: Proof. A plaintiff’s burden of offering evidence
sufficient to prove damages cannot be sustained by evidence which is
speculative and conjectural, but proof of damages to a mathematical
certainty is not required; the proof is sufficient if the evidence is such
as to allow the trier of fact to estimate actual damages with a reasonable
degree of certainty and exactness.
27. Words and Phrases. Overhead costs are business expenses that cannot
be allocated to a particular service or product.
28. Rules of Evidence. In proceedings where the Nebraska Evidence Rules
apply, the admissibility of evidence is controlled by the Nebraska
Evidence Rules; judicial discretion is a factor only when the rules make
such discretion a factor in determining admissibility.
29. Trial: Evidence: Appeal and Error. To constitute reversible error in a
civil case, the admission or exclusion of evidence must unfairly preju-
dice a substantial right of the litigant complaining about evidence admit-
ted or excluded.
30. Trial: Presumptions: Waiver. Generally, a motion which is never
called to the attention of the court is presumed to have been waived or
abandoned by the moving party, and, where no ruling appears to have
been made on a motion, the presumption is, unless it otherwise appears,
that the motion was waived or abandoned.
31. Attorney Fees. If an attorney seeks a statutory attorney fee, that attor-
ney should introduce at least an affidavit showing a list of the services
rendered, the time spent, and the charges made.
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Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
ACI WORLDWIDE CORP. v. BALDWIN HACKETT & MEEKS
Cite as 296 Neb. 818
32. ____. An award of attorney fees involves consideration of such factors
as the nature of the case, the services performed and results obtained,
the length of time required for preparation and presentation of the case,
the customary charges of the bar, and general equities of the case.
Appeal from the District Court for Douglas County: J
Russell Derr, Judge. Affirmed.
Gregory C. Scaglione, Patrice D. Ott, and John V. Matson,
of Koley Jessen, P.C., L.L.O., and Eric J. Magnuson, Ryan W.
Marth, and Christopher P. Sullivan, of Robins Kaplan, L.L.P.,
for appellant.
Michael F. Coyle, Timothy J. Thalken, and Robert W. Futhey,
of Fraser Stryker, P.C., L.L.O., for appellees.
H eavican, C.J., Wright, Cassel, Stacy, K elch, and
Funke, JJ.
K elch, J.
I. NATURE OF CASE
In September 2012, ACI Worldwide Corp. (ACI) sued
Baldwin Hackett & Meeks, Inc. (BHMI); its cofounders; and
other BHMI principals. The primary claims involved in this
case are ACI’s claim that BHMI misappropriated its trade
secrets and BHMI’s counterclaims that ACI tortiously inter-
fered with a business relationship, breached a nondisclosure
agreement, and violated provisions of Nebraska’s unlawful
restraint of trade statutes (referred to as the “Junkin Act”).1
In a 2014 trial, a jury found that ACI had not met its burden
of proof with respect to its misappropriation claim. In a 2015
trial, a jury found in favor of BHMI on all of its counter-
claims and awarded BHMI $43,806,362.70. The district court
awarded BHMI $2,732,962.50 in attorney fees and $7,657.93
in costs.
ACI filed motions to vacate the 2014 and 2015 judgments,
reopen the evidence, and grant ACI a new trial on the basis
1
See Neb. Rev. Stat. §§ 59-801 to 59-831 (Reissue 2010).
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Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
ACI WORLDWIDE CORP. v. BALDWIN HACKETT & MEEKS
Cite as 296 Neb. 818
that it had discovered new evidence. This “new” evidence was
trade secret information, which the district court had previ-
ously ruled could not be discovered until ACI conducted more
non-trade-secret discovery to support its claims. However,
ACI obtained the evidence in a federal action against one of
BHMI’s customers. The district court overruled ACI’s posttrial
motions, and ACI appeals.
II. FACTS
1. Prelitigation
ACI and BHMI are competitors in the business of devel-
oping and licensing electronic payment processing software,
including “middleware.” Middleware is computer software that
enables other software applications to communicate with one
another by routing messages between them. Two different
middleware programs are involved in this case: (1) ACI’s mid-
dleware, “NET24-XPNET” (XPNET), and (2) BHMI’s middle-
ware, “Concourse - TMS” (TMS).
(a) Middleware Programs
(i) XPNET
ACI’s XPNET software has been the primary middleware
in the electronic payments market for the past 40 years, and it
generates approximately $52 million in annual revenue for ACI.
Of the approximately 350 worldwide customers in the market,
approximately 300 customers use XPNET. One of those cus-
tomers is MasterCard International, LLC (MasterCard).
By itself, XPNET does not do anything. In order for a
customer like MasterCard to use XPNET, it must purchase
or develop a program to “bolt onto” XPNET. To “bolt onto”
XPNET, MasterCard purchased a program known as the
MasterCard Debit Switch or MDS.
In a March 2008 letter, ACI announced to MasterCard and
other customers that it intended to transition all customers
from “BASE24,” which XPNET is a part of, and which runs
exclusively on Hewlett Packard (HP) NonStop hardware, to
“BASE24-eps,” which would run on IBM hardware. In the
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Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
ACI WORLDWIDE CORP. v. BALDWIN HACKETT & MEEKS
Cite as 296 Neb. 818
letter, ACI advised its customers that it would no longer pro-
vide routine enhancements or support for BASE24.
After the March 2008 announcement, ACI’s customers
became concerned that they would have to license all new
software and purchase new IBM hardware, resulting in the loss
of their significant investment in the HP NonStop hardware.
MasterCard representatives met with HP representatives to dis-
cuss the future of HP hardware. When the topic of middleware
came up, HP recommended that MasterCard take a look at
BHMI, who had previously worked for HP on a project.
(ii) TMS
In April 2008, a sales representative from HP contacted
BHMI to see if BHMI would be interested in developing an
XPNET replacement for MasterCard. BHMI indicated that it
was interested, and in mid-April, HP, MasterCard, and BHMI
had a preliminary conference call to discuss BHMI’s capa-
bilities and MasterCard’s requirements and interest in replac-
ing XPNET.
In April 2009, MasterCard entered into a contract with
BHMI to develop the XPNET replacement. MasterCard wanted
a middleware that could be used not only on HP NonStop hard-
ware, but on other platforms as well. BHMI developed TMS,
which was designed to run on all major types of hardware.
In June 2010, MasterCard sent ACI a notice that it would
not renew its contract for XPNET. By May or June, TMS had
been delivered to MasterCard, and MasterCard was testing it
by running it on various components of its network. On August
20, MasterCard accepted TMS.
In December 2010, BHMI began to market TMS and issued
a press release announcing that MasterCard had replaced
XPNET with TMS and that TMS would be commercially avail-
able to other HP NonStop users.
(b) ACI Meets With BHMI
In late December 2010, ACI contacted BHMI and requested
a meeting to discuss ACI’s concerns that BHMI had used
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Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
ACI WORLDWIDE CORP. v. BALDWIN HACKETT & MEEKS
Cite as 296 Neb. 818
ACI’s proprietary information to develop TMS. BHMI denied
ACI’s accusation and agreed to meet so long as ACI provided
an agenda prior to the meeting and signed a nondisclosure
agreement. ACI and BHMI exchanged at least six versions of
the nondisclosure agreement before agreeing on the final ver-
sion. The final version of the nondisclosure agreement (NDA)
contained a provision that ACI would not utilize the confiden-
tial information of BHMI in any manner, including in a legal
action against BHMI or its customers.
After the NDA was signed, BHMI met with Charles Linberg,
ACI’s chief technology officer, and Alan Hoss, another ACI
employee, to discuss how TMS operated. At the conclusion
of the meeting, Linberg and Hoss requested to see the source
code and manuals for TMS. After an internal discussion, BHMI
agreed to allow Linberg and Hoss to review the technical
manuals for TMS.
2. ACI’s Complaint and
BHMI’s Countersuit
In September 2012, ACI filed a complaint against BHMI and
its officers, alleging eight causes of action: breach of contract,
misappropriation of trade secrets, fraud, unjust enrichment,
tortious interference with business relations and expectations,
conversion, trespass to chattels, and civil conspiracy. All of
these claims, except for the claim of misappropriation of trade
secrets against BHMI, were dismissed through pretrial motions.
To support its claim of misappropriation of trade secrets, ACI
alleged in its complaint that “BHMI agreed to allow ACI
representatives to conduct an examination of the operations,
configurations, and application programming manuals related
to [TMS]” and that “[a]s a result of the inspection, ACI found
a high degree of conceptual similarity . . . .”
BHMI countersued, alleging that ACI had (1) breached
the NDA by utilizing BHMI’s confidential information in
a legal action against BHMI; (2) tortiously interfered with
BHMI’s prospective business relationships by falsely claiming
that TMS was the product of infringment, which placed a cloud
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Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
ACI WORLDWIDE CORP. v. BALDWIN HACKETT & MEEKS
Cite as 296 Neb. 818
over TMS and prevented BHMI from marketing or licensing it;
and (3) violated the Junkin Act, which is Nebraska’s counter-
part to the federal antitrust laws, i.e., the Sherman Act and the
Clayton Act.2
In November 2012, the first hearing was held. At the hear-
ing, BHMI asked for expedited discovery because of the
impact that the litigation was having on BHMI’s ability to mar-
ket TMS. Counsel for ACI stated that “we certainly welcome
expedited discovery.”
3. Discovery
(a) ACI’s Motions to Compel BHMI to
Produce Trade Secret Information
In December 2012, before ACI had even served written
discovery on BHMI, ACI filed a motion to compel BHMI
to produce trade secret information, including TMS’ source
code and manuals. In the same motion, ACI sought a protec-
tive order for its own trade secret information. In support of
its motion to compel, ACI alleged that ACI employees had
reviewed TMS manuals and found a high degree of similarity
between XPNET and TMS. In the motion, ACI proposed that
BHMI disclose its source code and manuals to an expert hired
by ACI, who would review the information and provide to ACI
an opinion as to whether misappropriation had occurred. ACI
would then decide whether to continue its suit, and if it did,
then ACI would submit its trade secret information to an expert
hired by BHMI.
After three hearings on ACI’s motion, which are described
below, the district court overruled ACI’s motion to compel,
indicating that it would consider granting a similar motion
in the future, provided that ACI conducted some non-trade-
secret discovery.
2
Credit Bureau Servs. v. Experian Info. Solutions, 285 Neb. 526, 531, 828
N.W.2d 147, 151 (2013) (citing Pierce Co. v. Century Indemnity Co., 136
Neb. 78, 285 N.W. 91 (1939)).
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Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
ACI WORLDWIDE CORP. v. BALDWIN HACKETT & MEEKS
Cite as 296 Neb. 818
(i) February 2013 Hearing
The first hearing on ACI’s motion to compel was held in
February 2013. In opposition to the motion, BHMI argued
that under Nebraska case law, before ACI could gain access
to BHMI’s trade secrets, ACI must set forth with particular-
ity what trade secrets of XPNET it contends BHMI mis-
appropriated. BHMI also expressed concern that under the
plan proposed by ACI, BHMI’s biggest competitor, ACI’s
expert would have access to its most sensitive information,
and that if ACI decided not to continue the suit, then ACI
would never have to disclose the information contained in
the expert’s report, nor would there be any “checks” on what
ACI did with that information. ACI argued that it had pled
its misappropriation claim with sufficient particularity when
it pled that TMS and XPNET were similar in conception and
implementation and that it needed BHMI’s source code to
prove its claims.
After hearing the parties’ arguments, the district court
told ACI:
I want you to get what you need, but I understand
completely [BHMI counsel’s] need to protect his client,
too, at the same time. So — these trade secret cases and
confidential information cases are kind of tricky some-
times, and I understand both needs here. You can’t be so
handcuffed you can’t prove your case; but, on the other
hand, I just don’t think because they get sued they have
to turn over everything to you that could damage —
potentially damage them far beyond just disclosing the
limited amount of information.
The court stated, “I think the best thing to do would be to
respond — to provide with particularity what it is you believe
they have done and then we’ll decide the most limited way
that you can obtain the information that you believe you
need.” The court then decided to hold ACI’s motions in abey-
ance until such time as ACI produced with particularity what
it believed BHMI had misappropriated.
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Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
ACI WORLDWIDE CORP. v. BALDWIN HACKETT & MEEKS
Cite as 296 Neb. 818
(ii) April 2013 Hearing
The second hearing on ACI’s motion was held in April 2013.
At this hearing, ACI offered exhibit 5, which was a response
to interrogatories, in support of its motion. ACI asserted that
exhibit 5 identified with particularity the trade secrets it con-
tended BHMI misappropriated. However, BHMI argued that
the characteristics identified in exhibit 5 were not ACI’s trade
secrets, but characteristics of every middleware program and
were available in the public domain. BHMI argued that before
ACI could gain access to its trade secret information, ACI must
show that the information in exhibit 5 is a trade secret and that
it was misappropriated by BHMI. The district court agreed and
again held ACI’s motion in abeyance.
(iii) May 2013 Hearing
In May 2013, another hearing was held on ACI’s motion
to compel. This time, ACI offered a document referred to as
ACI’s “trade secret statement.” In the statement, ACI aimed to
show what information it believed BHMI had misappropriated
and that such information was a trade secret. To prove that the
information was a trade secret, ACI illustrated the steps ACI
had taken to keep the information a secret and the economic
value that XPNET had to ACI.3 ACI also alleged in the state-
ment that it was convinced BHMI stole the information, but it
did not know how.
In opposition to the motion, BHMI offered Linberg’s deposi-
tion, which BHMI argued showed that ACI did not have a good
faith basis for its lawsuit against BHMI and that therefore ACI
was not entitled to trade secret discovery. ACI had identified
Linberg as one of two people who had knowledge of BHMI’s
alleged improprieties. So, at the deposition, counsel for BHMI
3
See Neb. Rev. Stat. § 87-502(4)(a) (Reissue 2014) (defining “[t]rade
secret” as information that “[d]erives independent economic value, actual
or potential, from not being known to . . . other persons who can obtain
economic value from its disclosure or use” and is “the subject of efforts
that are reasonable under the circumstances to maintain its secrecy”).
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ACI WORLDWIDE CORP. v. BALDWIN HACKETT & MEEKS
Cite as 296 Neb. 818
asked Linberg for all the bases Linberg had for believing
that BHMI had misappropriated ACI’s proprietary information.
Linberg testified that he believed BHMI had misappropriated
ACI’s proprietary information after he saw BHMI’s marketing
materials and website, because “it would be impossible for any
other company to develop a software system that does the same
functions that [XPNET] does without stealing [ACI’s] trade
secrets.” BHMI counsel asked Linberg, “So even if we were
to come forward and produce all of our software code and it’s
completely different but it does the same thing [as XPNET],
you still believe that it’s a violation of your trade secrets?”
Linberg replied, “[Y]es.” Linberg testified that even if he had
not met with BHMI and reviewed its manuals, ACI still would
have sued BHMI.
After hearing both parties argue, the court reserved ruling
until it received BHMI’s brief.
(iv) Order Overruling ACI’s
Motion to Compel
On July 29, 2013, the district court issued an order overrul-
ing ACI’s motion to compel BHMI to produce its source code
and manuals. In the order, the court agreed with ACI that it
was not “required at this stage of litigation to prove exactly
how and when the trade secrets were allegedly misappropri-
ated,” but stated that ACI “should not be able to gain unfet-
tered access to [BHMI’s] own valuable trade secrets simply
by making the allegation [that BHMI misappropriated ACI’s
proprietary information].”
The court noted its broad discretion under Neb. Ct. R. Disc.
§ 6-326 of the Nebraska Rules of Discovery to limit the time,
place, and manner of discovery as required “‘to protect a
party or person from annoyance, embarrassment, oppression,
or undue burden or expense.’” Additionally, the court noted its
“broad discretion to modify the timing and sequence of discov-
ery ‘for the convenience of the parties and witnesses and in the
interests of justice.’” The court then stated:
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ACI WORLDWIDE CORP. v. BALDWIN HACKETT & MEEKS
Cite as 296 Neb. 818
Under a properly crafted protection order, the Court
would be inclined to allow discovery of the source code,
if and when there is significantly more evidence to sup-
port [ACI’s] allegations. At this juncture, there are the
allegations contained in [ACI’s] Complaint, denials in
[BHMI’s] Answer, and testimony of [ACI’s] representa-
tive, [Linberg]. Short of ordering BHMI to produce its
source code to [ACI’s] expert, there would appear to be
any number of means of discovery that may uncover evi-
dence of plagiarizing, including depositions of MasterCard
representatives, [BHMI], current and former employees of
[BHMI], third-party contractors of BHMI, as well as sub-
poenas for documents from MasterCard and third-party
contractors, and, of course, requests for production of
documents from [BHMI].
(b) Further Discovery: MasterCard
In August 2013, ACI served MasterCard with a subpoena
duces tecum. In the subpoena, ACI requested that MasterCard
produce, among other documents, TMS’ manuals and any
documents showing MasterCard’s requirements and specifica-
tions for TMS. After MasterCard indicated that it would not
produce these documents, ACI filed a “Motion to Clarify Order
Regarding Source Code and Notice of Hearing.”
(i) ACI’s First Motion to Clarify
At the hearing on ACI’s motion to clarify, the district
court stated that it did not intend “to just allow [ACI] to go
to MasterCard and get what we’re not disclosing yet from
BHMI.” ACI argued that it was not asking for all of BHMI’s
manuals, but for manuals that BHMI had given to MasterCard
during the development of TMS. Counsel for BHMI agreed
that any exchanges between MasterCard and BHMI made
before BHMI entered into a contract with MasterCard were
“fair game.” But counsel for ACI clarified that ACI wanted
all exchanges made before the delivery of TMS, including
exchanges made after the parties entered into an agreement.
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ACI WORLDWIDE CORP. v. BALDWIN HACKETT & MEEKS
Cite as 296 Neb. 818
Because it seemed that the parties might be able to reach an
agreement as to what ACI could discover from MasterCard,
the court directed the parties to work together to draft a pro-
tective order to govern the MasterCard discovery. Although
the parties agreed on a protected order, they did not reach an
agreement as to whether postcontract, predelivery exchanges
were discoverable.
After the hearing, MasterCard produced some of the docu-
ments requested by ACI. However, MasterCard did not pro-
duce “Requirements Documents” or “External Specification
Documents,” because it believed doing so would violate
the district court’s July 29, 2013, order. The “Requirements
Documents” and “External Specification Documents” were
sent to MasterCard as attachments in emails. MasterCard pro-
duced the emails to which the documents were attached, but
not the attachments. After MasterCard refused to disclose those
attachments, ACI filed a motion to compel MasterCard to pro-
duce the email attachments.
(ii) September 2013 Hearing
In September 2013, a hearing was held on ACI’s motion
to compel MasterCard to produce the email attachments.
At the hearing, ACI argued that certain emails produced by
MasterCard showed that the attachments at issue must have
contained ACI’s trade secrets. In support of its argument, ACI
pointed to an email sent from MasterCard to BHMI, wherein
MasterCard answered some questions that BHMI asked in the
course of developing TMS. In the email, BHMI asked questions
such as, “What is the MSG Transparent field in the header used
for? I don’t think TMS has any need for this.” ACI claimed
that “MSG Transparent” relates to XPNET and argued that
MasterCard must have given BHMI information about XPNET
in order for BHMI to ask this question. ACI also pointed to a
document that contained an action list, which was sent from
MasterCard employee Theresa LaRosa to other MasterCard
employees. Under the name “Kim Hall,” the document stated,
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ACI WORLDWIDE CORP. v. BALDWIN HACKETT & MEEKS
Cite as 296 Neb. 818
“Provide BHMI current setup of XPNet external processes and
how these configurations are cycled in.”
MasterCard argued that ACI was again seeking documents
from MasterCard that it was precluded from getting from
BHMI. MasterCard asserted that both the “Requirements
Documents” and the “External Specification Documents” were
sent to MasterCard from BHMI and contained BHMI’s confi-
dential trade secret information, including manuals and hun-
dreds of pages describing the functionality and design of TMS.
MasterCard also argued that it was precluded from producing
the attachments because MasterCard had signed nondisclosure
agreements with BHMI.
BHMI agreed that the email attachments were confidential
trade secret information and asked the court to overrule the
motion. BHMI also argued that even though the document
with the action list suggested that MasterCard had planned to
provide BHMI with XPNET information, ACI had not pro-
duced any evidence that such an action was ever taken. BHMI
asserted that ACI was set to depose a MasterCard representa-
tive in October 2013 and argued that ACI had “more than
adequate evidence and paperwork to go take the deposition.”
BHMI suggested that if ACI could produce additional evidence
in support of its claims as a result of the deposition, then the
court could reconsider its decision to allow ACI to discover
the attachments.
After hearing the parties argue their positions, the district
court asked ACI if it could proceed with the MasterCard depo-
sition without the attachments and then report back to the court
with more specific information regarding BHMI’s alleged mis-
appropriation. ACI indicated that it could not “take a meaning-
ful deposition” without those documents.
The district court then suggested a number of questions
that ACI could ask to solicit information about the email
attachments. The court suggested for example that ACI could
“depose any number of MasterCard authors of these e-mails
[and ask them:] What did you mean by this? What did you
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send?” The district court also suggested that ACI could “ask
[BHMI’s employees:] Why did you ask the question [about
MSG Transparent field in the header]? Why did you use that
term? Isn’t that an XPNET header field?” The court stated that
if the answers to the depositions were “not enough, they’re
guarded, they’re deceptive, there is a lot of, I don’t recall, I
don’t remember,” then the court would entertain expanding the
scope of discovery.
(iii) MasterCard Deposition:
Stephen Birge
On October 2, 2013, ACI deposed Stephen Birge, a senior
business leader at MasterCard. ACI asked Birge about the
email attachments. Birge testified that one of the documents
was “BHMI created” and was a “very high level proposal to
MasterCard.” Another document contained “some of the header
fields that the MDS [MasterCard debit switch] application was
using at that time,” which was “produced by looking at the
MDS source code.” As stated above, MDS was an application
that MasterCard had purchased to “bolt onto” XPNET. Birge
testified that the MDS source code did not contain any com-
ponents of XPNET and that MasterCard never provided BHMI
with any of the ACI header layouts. When asked whether “bits
of information in the MDS source code [were] only there
because . . . MasterCard used XPNET for its middleware,”
Birge stated that he did not know the origin of particular lines
of code.
Birge also testified that MasterCard never provided BHMI
with a written list of MasterCard’s requirements for TMS.
According to Birge, “since TMS was already 80 percent [writ-
ten]” when MasterCard met with BHMI, MasterCard and
BHMI merely had a “back and forth dialogue” about what was
already written and what MasterCard needed.
Birge was also asked about the action list, wherein “Kim
Hall” was to “[p]rovide BHMI current setup of XPNET exter-
nal processes . . . .” Birge testified that he did not know if Hall
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ever provided that information to BHMI, but he did not see it
upon his review of MasterCard documents. Birge believed that
whoever created the action list was using the term “XPNET”
as a generic term for middleware and that the intent was not
to send BHMI the XPNET information, but to provide them
with information about “processes that run outside of middle-
ware control.”
In the 3 months following Birge’s deposition, ACI did not
communicate with MasterCard and did not request any fur-
ther information from MasterCard. Additionally, ACI did not
and had not requested any depositions of BHMI or any of
its employees.
(c) BHMI’s Motion for Summary Judgment
and ACI’s Motions to Compel
MasterCard and BHMI
On December 27, 2013, BHMI filed a “Motion for Summary
Judgment” in favor of BHMI on all issues. One week later,
ACI filed a motion to continue BHMI’s motion for summary
judgment, as well as a motion to compel MasterCard to pro-
duce documentation of all the documents it was withholding
pursuant to the July 29 protective order. On January 30, 2014,
a hearing was held on BHMI’s motion for summary judgment
and ACI’s motion for a continuance.
(i) January 30, 2014, Hearing
ACI argued that it needed a continuance for the motion for
summary judgment because, without the email attachments,
ACI could not yet prove its case. To persuade the district court
to allow ACI to discover the email attachments, ACI pointed
to Birge’s deposition, wherein Birge was unable to recall,
without referencing the attachments, exactly what information
MasterCard sent to BHMI.
In opposition to ACI’s motion to continue, BHMI reminded
the district court of the parties’ request for expedited discovery
and argued that ACI was not actively pursuing discovery.
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After hearing the parties’ arguments, the district court
offered ACI 30 days to submit evidence and any resistance,
but indicated that BHMI’s motion for summary judgment was
not premature. ACI argued that to defend the motion for sum-
mary judgment within 30 days, ACI would need a ruling on its
motion to compel production from MasterCard. Although ACI
had not requested a hearing on that motion, the district court
stated that it would do “everything in [its] power” to get ACI
an expedited hearing on that matter. Additionally, although
ACI had not previously requested a deposition of BHMI or
any of its employees, counsel for BHMI offered to “make
somebody available from [BHMI] for deposition in the next
30 days.”
(ii) February 7, 2014, Hearing
One week later, the district court held a hearing on ACI’s
motion to compel production from MasterCard. In support of
its motion to compel, ACI again argued that it was unable to
properly depose Birge without the attachments. ACI argued
that the documents were “crucial for [ACI] to examine the
BHMI representatives . . . and to further examine MasterCard.”
In opposition to ACI’s motion, MasterCard argued that
although counsel for ACI “would lead [the court to] believe
that [Birge was] not prepared to testify” on the documents ACI
was requesting, “the requirements document was the subject
of over 20 pages of testimony in a seven-hour deposition.”
MasterCard argued that it had already produced over 19,000
pages of documents and that all of the documents that ACI
sought were all within BHMI’s possession. Thus, MasterCard
argued, if ACI is entitled to the documents, it should get them
from BHMI.
The district court agreed with MasterCard, stating, “I’m
going to overrule the motion to compel as against MasterCard.
I’m not saying you’re not entitled to this information; but
I think to the extent you’re entitled to it, it needs to come
from BHMI.”
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Later that day, ACI filed a motion to compel BHMI to pro-
duce the email attachments. A hearing on the motion was held
on February 25, 2014.
(iii) February 25, 2014, Hearing
At the hearing, ACI argued that it should at least be able to
discover the attachments that MasterCard had sent to BHMI,
because those attachments were from MasterCard and therefore
were not BHMI’s proprietary information.
BHMI advised the court that on January 31, 2014, ACI had
filed a suit against MasterCard in the U.S. District Court for
the District of Nebraska.
After hearing both parties, the district court commented:
[O]ne of the problems with . . . these type of cases, is that
both sides are a little bit at a disadvantage, because you
think something happened and you’re trying to prove it.
That’s your burden. They say it didn’t, and why would we
have to turn stuff over when we don’t think there’s any
evidence that says we did what you’re alleging. You’re
both kind of handcuffed a little bit.
. . . I think I kind of discussed this a little bit in one of
my first orders in this case . . . . Basically you’re asking
the defendants in this case to reveal everything they got
from MasterCard, and you got MasterCard’s trade secrets,
you’ve got BHMI’s trade secrets, you’ve got your trade
secrets. You’re trying to protect yours, they’re trying to
defend and protect theirs, yet you want them to disclose
things that they shouldn’t have to disclose if they didn’t
do anything wrong.
The court told counsel for ACI, “I’m very sympathetic to your
plight,” but added, “Basically what you’re asking me to do
is order BHMI to turn over the trade secrets, if you will, of
MasterCard, while you’re in the process of suing them for
$40 million . . . .”
The district court suggested a number of ways that ACI
could proceed with discovery without the email attachments. It
asked counsel for ACI, “Did you depose [Theresa] LaRosa?”
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ACI’s counsel stated, “Not yet.” The court asked, “When do
you intend to do so? Because she’s the one that wrote this
[action list].” The court also asked ACI, “Did you depose
Kim Hall? . . . She’s on this as the person that’s going to
provide BHMI the current set of XPNET external processes
. . . .” ACI responded, “I certainly will, Your Honor.” The
court also asked, “Did you depose the people who actually
sent the [e]mails [with the attachments]?” Counsel for ACI
responded, “No, not yet.” The court then advised ACI that it
should go take depositions. It told ACI, “I’m not precluding
or pre-deciding any issue, but I think it’s premature until these
individuals are deposed. And once it’s completed, if you want
to spend more time on this issue, either party, I’d be more than
happy to provide the time.”
(iv) Order on Motion for
Summary Judgment
After another hearing on BHMI’s motion for summary
judgment, the district court issued an order granting summary
judgment in favor of BHMI as to all of ACI’s claims, except
the claim of misappropriation of trade secrets.
(d) ACI’s Motions to Continue Trial
and to Compel Production of
BHMI’s Trade Secrets
In April 2014, ACI filed a motion to continue the trial, which
had been set for July 28. On the same day, ACI also filed a
motion to compel the production of the email attachments and
TMS’ source code and manuals, as well as a motion to renew
its prior motions to compel. A hearing on those motions was
held on June 25.
(i) June 25, 2014, Hearing
In support of its motion to continue trial, ACI argued that
just 5 days prior, BHMI had identified three new expert wit-
nesses that were not previously disclosed and had claimed
damages in excess of $20 million. ACI argued that it needed
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to analyze the information relating to damages and to depose
the newly identified witnesses.
In response, BHMI argued that ACI has been aware of the
damages it was going to claim for months. In March 2014,
a BHMI employee had testified that BHMI was estimating
prospective damages in excess of $10 million and that First
National Bank of Omaha had canceled a seven-figure con-
tract based solely on ACI’s lawsuit. BHMI also argued that
it had been 2 years since ACI filed the lawsuit and “they’ve
got nothing.”
The court indicated that it did not want to delay the trial
on ACI’s claims, but that it was willing to bifurcate the case
into two trials. It suggested that the first trial be on ACI’s
claims against BHMI and that the second trial be on BHMI’s
claims against ACI. ACI admitted that bifurcation would solve
some of the “recent disclosure issues,” but maintained that
there were a lot of other reasons why the trial on ACI’s claims
should be delayed. For example, ACI asserted that MasterCard
had refused to consent to depositions of its employees. But
when asked whether ACI had subpoenaed those witnesses, ACI
indicated that it had not.
In support of ACI’s motion to compel, ACI argued that it
had presented sufficient evidence for the district court to allow
discovery of the trade secret information: It had produced a
“trade secret statement”; it had produced BHMI’s contract with
MasterCard, wherein it referenced XPNET functionality; and
it had produced MasterCard’s action list, wherein it stated that
Hall should “‘[p]rovide BHMI current setup of XPNET exter-
nal processes . . . .’”
After ACI referenced the action list, the district court asked
ACI if it ever took the depositions of Hall and LaRosa.
Counsel for ACI stated, “I want to, Your Honor,” to which
the court asked ACI, “Well, why haven’t you?” Rather than
explaining why ACI had not taken the depositions, counsel
for ACI gave the court a history of its efforts to get access to
BHMI’s trade secrets.
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ACI then told the court, “Your Honor, we need the e-mail
attachments. I don’t know how we try this case without them.”
After approximately 30 pages of argument, the district court
indicated that without any new evidence, it was not going to
change its previous rulings.
(ii) District Court’s
July 14, 2014, Order
On July 14, 2014, the district court issued an order, which,
among other things, overruled ACI’s motion to continue trial.
In the order, the court noted that although the case was filed
in September 2012, no depositions were taken until May 2013,
when BHMI deposed ACI representative Linberg. The court
wrote, “As of this writing in late June, 2014, so far as the Court
can tell, only 4 other depositions have been taken”: Birge, the
MasterCard representative, and three BHMI employees.
The district court also noted that although ACI knew the
trial date was approaching, ACI has “resisted to this point
the Court’s encouragement to engage in vigorous non trade
secret discovery.” The court stated that “the only significant
evidence” that ACI presented of plagiarism was the affidavit
of an ACI employee, stating that he reviewed emails transmit-
ting information from MasterCard to BHMI and that based on
his review, he strongly believed that MasterCard had provided
BHMI with ACI’s proprietary information. The district court
noted that the emails referenced in the affidavit were between
11 different MasterCard employees and that ACI had not
deposed any of them.
The district court ended its order stating:
To be absolutely clear, the Court has never taken
the position that [ACI] could not have access to the
source codes under any circumstances. The Court has
simply asked for evidence to be produced that supports
a certain level of probability that plagiarism occurred
before triggering the disclosure of the source code and
related materials.
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4. First Trial: ACI’s Claims
Against BHMI
ACI’s claims against BHMI were tried in July and August
2014. At the trial, as ACI states in its brief on appeal, “ACI
was forced to rely on circumstantial evidence as to what was
disclosed to and used by BHMI,” such as “the fact that com-
munications were flowing back and forth” and “the necessity
of XPNET trade secrets being incorporated into TMS for the
MDS to function properly in the manner BHMI claimed.”4
Although the district court denied BHMI’s motion for
directed verdict, concluding “there’s enough evidence for the
jury to consider the misappropriation of trade secrets,” the jury
ultimately returned general verdicts that ACI had not met its
burden of proof on any of its claims.
5. Between Trials
On March 6, 2015, pursuant to ACI’s federal action against
MasterCard, ACI was able to obtain the attachments to the
emails from MasterCard to BHMI. In June or July, the federal
court granted ACI’s motion to amend the protective order to
allow ACI to use the email attachments in the state court case.
(a) July 2015 Motions
In July 2015, a series of motions were filed by both parties.
On July 13, ACI filed a motion for summary judgment as to
all BHMI’s counterclaims, and on July 17, it filed a motion to
vacate the 2014 verdicts and associated judgments, reopen dis-
covery, and grant a new trial. On July 26, BHMI filed a motion
to continue the hearings on ACI’s motions, and ACI filed
another motion to continue trial. On July 31, a hearing was
held on (1) ACI’s motion for summary judgment, (2) ACI’s
motion to vacate the 2014 judgment, and (3) BHMI’s motion to
continue the hearings for ACI’s motion for summary judgment
and motion to vacate the 2014 judgment.
4
Brief for appellant at 17.
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(i) Motion for Summary Judgment
In support of its motion for summary judgment, ACI argued,
among other things, that BHMI’s damages evidence was imper-
missibly speculative and that the breach of contract claim
based on the NDA was inadequate “as a matter of law.” ACI
also argued that the Noerr-Pennington doctrine immunized
ACI from claims relating to the filing of its lawsuit.5 According
to the record on appeal, this hearing was the first time ACI
ever raised the Noerr-Pennington defense. ACI’s motion for
summary judgment was overruled.
(ii) ACI’s Motion to Vacate
2014 Judgment
In support of ACI’s motion to vacate the 2014 judgment,
ACI advised the district court of the documents it obtained
during federal discovery. It also represented to the district
court that the attachments had been given to Mark Newsom, a
principal software engineer from ACI who works on XPNET.
Newsom created a report, which, according to ACI, showed
that the email attachments contained both paraphrased informa-
tion as well as “direct quotes” from XPNET’s manuals.
BHMI sought to continue this motion until after the second
trial, arguing that ACI had not produced to BHMI the email
attachments, any portions of the XPNET manuals, or Newsom’s
report. BHMI also argued that only 6 weeks remained until the
second trial. The district court agreed that there was no reason
to “mess with it right now.”
There was also some discussion as to whether the email
attachments could be produced at the second trial. ACI
argued that the attachments were relevant to the breach of
the NDA claim, because per the NDA, BHMI’s “Confidential
Information” did not include information that was indepen-
dently developed by ACI.
5
See Eastern R. Conf. v. Noerr Motors, 365 U.S. 127, 81 S. Ct. 523, 5 L.
Ed. 2d 464 (1961), and Mine Workers v. Pennington, 381 U.S. 657, 85 S.
Ct. 1585, 14 L. Ed. 2d 626 (1965).
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ACI then offered the email attachments “in support of the
motion to reopen discovery, vacate orders, grant and set a new
trial, and the other relief set forth in the motion.” The “other
relief” included a continuation of the second trial, but did not
include allowing ACI to present the email attachments at the
second trial.
ACI also asked the court to review the email attachments
in camera. The district court indicated that it would not do
so prior to the second trial; instead, it sealed the documents
and stated that it would consider them after the second trial,
if necessary.
(b) ACI’s Motion in Limine
In August 2015, ACI filed a motion for an order that the
email attachments and Newsom’s testimony about the email
attachments were admissible in the second trial. A hearing was
set for September 14 at 9 a.m. However, on appeal, there is no
record of the hearing or the court’s ruling on the motion.
6. Second Trial: BHMI’s
Counterclaims
The second trial on BHMI’s counterclaims against ACI was
held in mid-September 2015. Because ACI assigns that there
was insufficient evidence to support BHMI’s claims of breach
of contract and violation of the Junkin Act, and because ACI
assigns that there was “no cognizable evidence of damages to
support any claim,” we review the evidence presented on these
issues in detail.
(a) Evidence of Breach of NDA
Most of the evidence concerning BHMI’s claims of breach
of contract came from the testimony of Lynne Baldwin.
(i) History of BHMI
Lynne testified that she and her husband, Jack Baldwin,
formed BHMI in 1986, and in 1987, they were joined by
Michael Meeks, who now serves as BHMI’s vice president of
development.
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BHMI started as a custom software company that would
write specific software from customer’s specifications. Its
customers included large transportation and communications
corporations.
In the early 2000’s, BHMI began to develop “Concourse
Financial Software Suite” (Concourse), a software for com-
panies that exchange transactions among different parties,
referred to as “switches,” such as companies that track when
one bank’s customer uses another bank’s automated teller
machine. Lynne explained that if a customer uses its “Bank A”
debit card at “Bank B’s” automated teller machine, Concourse
can help switch companies route the transactions to “Bank
A,” so that “Bank B” will dispense cash to the customer,
all the while keeping track of the amounts that different
financial institutions owe each other for the service. Lynne
testified that a number of switches have licensed Concourse,
including a debit switch in Canada, the New York Cash
Exchange, and “Pulse,” the third largest debit switch in the
United States.
(ii) Development of TMS
According to Lynne, BHMI had a close, working rela-
tionship with HP. In April 2008, HP contacted BHMI to
ask if it was interested in doing a project with MasterCard.
BHMI indicated that it was. In April 2009, BHMI entered
into an agreement with MasterCard to create a replacement
for XPNET.
MasterCard and BHMI entered into a “Software License
and Maintenance Agreement.” Per the agreement, MasterCard
agreed to pay BHMI $1.3 million to license TMS for 5 years.
Lynne testified that because of BHMI’s development of
Concourse, BHMI already had a certain level of TMS devel-
oped. Nevertheless, according to Lynne, TMS took “thou-
sands of hours” and over a year to create. In August 2010,
MasterCard accepted TMS, and BHMI then had a proprietary
product that it could license and sell on the market.
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(iii) Marketing TMS
To advertise its new product, BHMI’s marketing director,
Casey Scheer, began a series of activities to market TMS,
including adding a YouTube video about TMS on BHMI’s
website and releasing a press statement about TMS and how
MasterCard was using it to replace XPNET. BHMI also hired
a marketing consultant to tell them how large the market for
TMS would be.
The marketing consultant advised BHMI that in order to
market the software, it needed to secure as a customer a pre-
mier bank (as opposed to a switch like MasterCard) to show
other banks that they could replace XPNET and the BASE24
system with TMS. Lynne explained that this would require
finding a bank that was willing to create its own application
around TMS, because “if you write any logical software that
hooks into [XPNET or BASE24], ACI also owns that software
even though [ACI] didn’t write it, because that’s the term of
[its] contract.”
(iv) First National Bank of Omaha
Expresses Interest in TMS
According to Lynne, after BHMI issued its press release, it
started to get responses from customers around the globe. One
such customer was First National Bank of Omaha (hereinafter
FNBO), one of the largest credit card processing banks in the
United States. A representative from FNBO emailed BHMI’s
marketing support person expressing interest in using TMS for
its credit card processing. BHMI then met with FNBO to dis-
cuss replacing the BASE24 system with TMS.
Lynne testified that FNBO was not happy with XPNET,
because it did not like ACI’s transaction-based pricing. Under
ACI’s transaction-based pricing, customers like FNBO had
to pay a certain amount per transaction in addition to the
license and maintenance fees. Additionally, FNBO had finan-
cial concerns about the cost of transitioning to IBM hardware.
Accordingly, BHMI started to negotiate with FNBO for the
installation and licensing of TMS.
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(v) ACI Contacts BHMI
In early January 2011, 1 month after BHMI issued its press
release, BHMI received a call from Dennis Byrnes, ACI’s
legal counsel. Byrnes requested a meeting, and Lynne met
with him. Byrnes told Lynne that ACI’s upper management
and technical support personnel had heard about TMS and
had concerns that it infringed on XPNET. Lynne responded
that she “‘didn’t know how it could infringe on XPNET’” and
explained to him that BHMI had used all of its own software
to create TMS.
Byrnes told Lynne that ACI staff would like to talk to BHMI
and have BHMI answer some questions. Lynne agreed to talk
to ACI and answer general questions, but because ACI was
now one of BHMI’s competitors, BHMI asked that ACI sign a
nondisclosure agreement and provide BHMI with a written list
of questions ahead of time. ACI agreed. Lynne testified that
Byrnes never said anything about filing a lawsuit; he wanted
only to “allay the fears of [ACI’s] upper management.”
Lynne testified that when she received the nondisclosure
agreement and list of questions from ACI, she was shocked by
the list of questions. She explained that she expected the ques-
tions to be related to the marketing materials that BHMI had
released. Instead, ACI asked “how [TMS] worked, how every-
thing inside of it worked, what are your algorithms?” Lynne
described these questions as “truly invasive,” because they
went to the “very essence of [BHMI’s] intellectual property.”
After receiving the nondisclosure agreement and questions,
Lynne wrote a letter to Byrnes, stating, “With regard to the
nondisclosure, BHMI does not see any language that would
restrict ACI from using information about [TMS] in its own
products. . . . Until we can mutually come to some agree-
ment on the nondisclosure, we cannot provide any substantive
information to ACI.” Lynne also expressed to Byrnes that
ACI’s question about “‘[i]dentify[ing] all interfaces provid-
ing XPNET compatibility’” made Lynne believe that ACI had
incorrect information about TMS. Lynne explained to Byrnes
that TMS is “‘not compatible with XPNET since it provides
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no interfaces with any part of XPNET,’” and “‘a TMS node
only communicates with other TMS nodes [and] cannot com-
municate with XPNET.’” Lynne suggested to Byrnes that per-
haps with this new information, ACI might be assuaged and
wish to withdraw its questions.
But ACI did not withdraw its questions, and instead contin-
ued to negotiate the NDA with BHMI. The final version of the
NDA provided that ACI would not use any confidential infor-
mation of BHMI’s in a legal action against BHMI. The NDA
provided, in relevant part:
1. CONFIDENTIAL INFORMATION AND
AUTHORIZED USE
a. “Confidential Information” means all non-public
information which [BHMI] furnishes to [ACI] . . . .
b. [ACI] wishes to receive [BHMI’s] Confidential
Information for the sole purpose of facilitating discus-
sions between management of each party regarding infor-
mation related to each party’s proprietary products (the
“Authorized Use”). . . .
c. Confidential Information shall not include any
information that (i) is or subsequently becomes publicly
available without [ACI’s] breach of any obligation owed
[BHMI], (ii) became known to [ACI] prior to [BHMI’s]
disclosure of such information to [ACI], (iii) became
known to [ACI] from a source other than [BHMI] other
than by breach of an obligation of confidentiality owed
to [BHMI] or (iv) is independently developed by [ACI].
2. RESTRICTIONS
....
c. Confidential Information may only be disclosed,
reproduced, summarized or distributed (i) as strictly nec-
essary for the Authorized Use, and (ii) only as otherwise
provided hereunder. For the avoidance of doubt, [ACI]
understands and agrees that in no event shall [ACI] uti-
lize the Confidential Information of [BHMI] in any man-
ner whatsoever (i) in the development of its respective
products; . . . (iii) in any legal action directed toward
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[BHMI] or its vendors, representatives, agents, or cus
tomers . . . .
After the NDA was executed by both parties, Lynne and
Meeks met with Linberg and Hoss of ACI. Although Lynne
expected that ACI would have some general questions about
TMS, ACI again wanted to know how TMS, its routing algo-
rithms, and its protocols all worked. According to Lynne,
Linberg was very adamant about seeing BHMI’s source code
and manuals. Lynne testified that she and Meeks did not show
Linberg or Hoss their source code or manuals and did not
answer all of ACI’s questions, and the meeting was adjourned.
Lynne then met with Byrnes to express her frustrations
about the questions she received from ACI. The questions, she
explained, were not what she and Byrnes agreed to. According
to Lynne, Byrnes looked at the questions and said, “‘Oh, I
guess there’s some mistake. I’ll take it back,’” and then he left.
Lynne testified that again Byrnes did not say anything about
ACI’s taking any legal action against BHMI.
BHMI held an internal meeting to discuss ACI’s concerns,
and it was decided that because BHMI “‘ha[d] nothing to
hide,’” maybe BHMI could let ACI “‘look at a couple of man-
uals.’” Lynne testified that BHMI believed there was nothing
in the manuals that would be a problem, so ACI could come
over, look at the manuals, and then “‘be happy.’”
On July 21, 2011, Linberg and Hoss came back to BHMI
to look at the manuals. BHMI allowed Linberg and Hoss to
look at the manuals in an office by themselves for as long as
they wanted, but restricted them from making any copies. In
addition, if Linberg and Hoss took any notes, BHMI wanted
to be able to see what they had written before they left. Lynne
believed that Linberg and Hoss spent “an hour and a half,
maybe two hours” looking at the manuals.
After Linberg and Hoss finished looking at the manuals,
they did not show Lynne any notes, and Lynne did not notice
any. Linberg told Lynne that BHMI would hear from ACI
within 2 weeks, but in the following months, BHMI did not
hear anything from ACI.
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(vi) Development Agreement
With FNBO
In the meantime, BHMI had entered into a development
license agreement with FNBO for $125,000 per year. The
development license allowed FNBO to start looking at how
TMS worked so that it could develop and install its own
hardware. The development license also contained all of the
commercial terms to upgrade to a 5-year full operating license
for $1.25 million, plus an 18-percent annual maintenance
fee. Under the agreement, BHMI would receive a total of
$1.525 million over 5 years. FNBO planned to “go live” with
TMS in August 2012.
As part of the agreement, BHMI agreed to indemnify FNBO
against any claims that its use of TMS violated a third-party’s
intellectual property rights. The agreement also required BHMI
to let FNBO know if it believed that TMS was going to
become the subject of an infringement claim. It also allowed
FNBO to terminate the agreement and receive a full refund
if TMS became the subject of an infringement claim. Lynne
testified that these indemnification provisions were standard
provisions in its agreements.
(vii) ACI Sues BHMI
In March 2012, ACI notified BHMI of its intent to sue the
company. According to Lynne, this was the first time that ACI
had ever stated its intention “out loud.”
Lynne testified that ACI’s lawsuit threat was a “huge deal.”
She explained that a claim of infringement “is very serious in
the marketplace” and that the “threat alone casts doubt on your
capabilities, on how responsible you are as a company, and a
lot of other areas.”
Both ACI’s chief executive officer and former HP executive
Steven Saltwick testified that a company would not be able to
license software that was alleged to be the product of infringe-
ment. Saltwick testified he would never even propose that an
HP NonStop customer consider a software solution if there was
a claim it had been misappropriated.
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In response to ACI’s lawsuit threat, BHMI told its market-
ing director to concentrate on marketing Concourse, instead
of TMS. BHMI also disclosed ACI’s threat to FNBO. FNBO
wanted the TMS solution to work and told BHMI that it would
work with BHMI as long as it could.
In July 2012, ACI and BHMI met again to discuss the issue,
but no resolution was reached. Lynne testified that at the
conclusion of the meeting, Linberg told BHMI that if it kept
going forward with TMS, then ACI would sue BHMI and any
customer that licensed TMS. Lynne testified that she could not
in good faith market the software when ACI had threatened to
sue anyone who licensed it.
Because the threat of litigation persisted, FNBO eventually
terminated its license with BHMI and demanded a refund,
which BHMI provided. Michael O’Neil, FNBO’s vice pres-
ident of technology, testified that “but for” ACI’s lawsuit
and threats, it would have entered into the 5-year production
license for TMS under the terms to which the parties had
already agreed and it would have renewed that license for an
additional 5-year term.
At the trial, counsel for BHMI questioned Lynne, over
ACI’s objections, about all of the different claims ACI alleged
against BHMI and against officers of BHMI in their per-
sonal capacity. Lynne was then asked about the first trial and
whether BHMI “won on every one of [ACI’s claims].” Over
ACI’s objection, Lynne testified that ACI did not win any of
its claims.
(b) Evidence Relating to
Junkin Act Claim
BHMI also sought to prove that ACI had violated the Junkin
Act by engaging in predatory or anticompetitive conduct to
acquire or maintain its monopoly power. Its theory was that
ACI sought to acquire or maintain monopoly power by assert-
ing, without good faith, that TMS was the product of infringe-
ment so as to put a cloud over TMS and prevent BHMI from
marketing it. Most of the evidence about the relevant market
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and ACI’s role within that market came from the testimony
of Saltwick.
As part of his role at HP, Saltwick had been responsible
for marketing HP NonStop hardware on a global basis and
had worked with HP NonStop customers and advised them
regarding software solutions. Because of this role, Saltwick
was familiar with the worldwide market for retail financial
payments software running on the HP NonStop platform. Of
the 350 companies in this market, 300 of them used ACI’s
software.
(c) Evidence Relating to Damages
Jack was the main witness to testify about BHMI’s lost
profits. BHMI does not use an outside public accounting firm;
instead, Jack handles BHMI’s finances, preparing documents
such as BHMI’s profit and loss statements, cashflow reports,
and tax returns. To calculate BHMI’s lost profits, Jack sub-
tracted BHMI’s estimated costs from its estimated revenue.
(i) Estimated Costs
Jack testified that in his lost profits analysis, he accounted
for certain estimated costs. Although BHMI did not accrue
much in additional costs after it had already developed TMS
for MasterCard, Jack explained BHMI would incur costs asso-
ciated with the installation, consulting, and educating of cus-
tomers as to how to use TMS. Jack estimated that these costs
added up to about 160 hours of labor. But for purposes of his
analysis, he “rounded up” to a “one-man month” of labor. To
calculate the cost of a “one-man month” of labor, he used the
$95,000 salary of an actual employee and added all the costs
associated with the employee’s employment, including unem-
ployment insurance fees, family medical insurance premiums,
and Social Security. Jack testified that BHMI paid a total of
$121,000 per year to employ the employee. Dividing that cost
by 12 for each month, Jack arrived at a cost of $10,113 per
month for the employee’s labor. This is the cost Jack attributed
to each licensing agreement.
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Jack testified that he did not account for BHMI’s general
overhead costs, because those costs would be incurred regard-
less of TMS. For example, BHMI’s costs for rent, telephones,
insurance, office supplies, and electricity would not have var-
ied based on whether BHMI licensed TMS to additional cus-
tomers. Jack also testified that if customers had a problem with
TMS, they would call BHMI’s general help desk, which BHMI
paid to operate regardless of TMS. Because BHMI did not
have a help desk dedicated to TMS, Jack did not attribute any
costs to those calls. Jack testified that he considered the mar-
keting costs for TMS, but explained that these costs were mini-
mal, because marketing TMS typically consisted of Scheer’s
attending conferences to market all of BHMI’s products, not
just TMS.
(ii) Net Lost Profits
a. FNBO
For the FNBO contract, Jack estimated that BHMI lost a
total of $3,103,793.24 as a result of FNBO’s backing out after
ACI’s lawsuit. For purposes of his lost profits analysis, Jack
assumed that FNBO would have licensed TMS for 5 years
and would have then renewed its license for another 5 years.
As for the fees under a 5-year licensing agreement, Jack used
the fees set forth in the development license, which shows
a licensing fee of $1.25 million and a maintenance fee of
$225,000. To calculate BHMI’s lost profits in relation to the
FNBO contract, Jack added the amount that BHMI refunded
FNBO for the development license and professional fees
($163,906.24) to the amount in fees that FNBO would have
paid under two 5-year licensing agreements ($2,950,000) for
a total of $3,113,906.24. Jack then subtracted the costs associ-
ated with those agreements ($10,113) to reach a net profit of
$3,103,793.24.
b. Other Lost Contracts
Jack also estimated lost profits incurred as a result of being
unable to market TMS to other companies during the course
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of the litigation. Jack assumed that BHMI would be able to
secure two customers per year. This assumption was supported
by Scheer’s testimony that, based on the interest she received
from the TMS marketing campaign, she felt “‘very confident
[BHMI could] close at least two contracts a year.’”
Jack also assumed that each company would renew their
5-year contracts for another 5-year term. This assumption was
based on O’Neil’s testimony that FNBO would have “contin-
ued with the [licensing] agreement another five years” and
other testimony that installing TMS is a significant investment
for a company.
To determine the fees that BHMI would have charged under
the licensing agreements, Jack based the fees off the exist-
ing contracts with MasterCard and FNBO. Jack testified that
BHMI had negotiated two different licensing fees for different
pricing structures used by MasterCard and FNBO. Because
Jack was unsure of which pricing structure most companies
would want, Jack averaged the net profit that each structure
would bring in his lost profits calculation.
Jack testified that because securing MasterCard and FNBO
as customers would help BHMI secure other customers, BHMI
offered MasterCard and FNBO discounted rates of one-third
the retail price for those pricing structures. Rather than using
the discounted rates, Jack used the retail prices to project the
profit that BHMI would have generated if it had been able to
enter into two 5-year license agreements per year for years
2012, 2013, and 2014. For these six licensing agreements,
Jack projected that TMS would have generated $17,703,072
in net profit. Assuming each of those companies renewed for
another 5-year licensing agreement, Jack projected a net profit
of $35,016,822.
7. Conclusion of Second Trial
At the end of BHMI’s case in chief and at the close of
the evidence, ACI moved for a directed verdict on multiple
grounds, including that BHMI failed to produce sufficient
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evidence of its antitrust claims, damages, and causation. The
district court denied ACI’s motion.
The evidence was submitted to the jury, and the jury returned
a verdict in favor of BHMI on all three claims, awarding dam-
ages of $43,806,362.70.
8. Attorney Fees
Having prevailed on its Junkin Act claim, BHMI petitioned
for attorney fees in the amount of $2,732,962.50 and costs
in the amount of $7,657.93. In support of its petition, BHMI
submitted the affidavit of Steven Davidson, the chair of a
local law firm’s litigation section, regarding the reasonable-
ness of BHMI’s fee application. Davidson reviewed a detailed
summary of the work performed and concluded that both
the numbers of hours expended and the hourly rates were
reasonable. ACI did not offer any expert evidence rebutting
Davidson’s opinion.
The district court applied the factors set forth in our case law
in determining the amount of a reasonable attorney fee. Well
aware of the nature of the proceedings and the novelty and
difficulty of the questions raised, the district court concluded
that under the totality of the circumstances, the fee requested
by BHMI was reasonable. Additional facts about the district
court’s reasoning are set forth in the analysis section below.
9. Posttrial Motions
After the second trial, ACI filed a number of motions,
including a motion for remittitur, motions to vacate the judg-
ments associated with the 2014 and 2015 trials, and motions
for new trials. These motions were overruled.
III. ASSIGNMENTS OF ERROR
ACI assigns, reordered and restated, that the district court
erred (1) in overruling ACI’s motions to dismiss BHMI’s coun-
terclaims because the Noerr-Pennington doctrine precludes
BHMI’s antitrust and tortious interference claims; (2) in over-
ruling its motion to vacate the dismissal of ACI’s claims
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against BHMI on the basis of denied discovery; (3) in refusing
to vacate the 2014 verdicts and associated judgment because
ACI was denied discovery of BHMI trade secret information;
and (4) in refusing to vacate the 2015 verdicts and associated
judgment because (a) the Noerr-Pennington doctrine precludes
BHMI’s antitrust and tortious interference claims, (b) BHMI
presented insufficient evidence to support any of its claims, (c)
BHMI presented no cognizable evidence of damages to sup-
port any claim, (d) ACI was denied discovery of BHMI’s trade
secret information, and (e) the email attachments were errone-
ously excluded from evidence.
ACI further assigns that the district court abused its dis-
cretion in granting BHMI’s application for attorney fees and
costs.
IV. STANDARD OF REVIEW
[1] An appellate court will reverse a decision on a motion to
vacate or modify a judgment only if the litigant shows that the
district court abused its discretion.6
[2] An appellate court reviews a trial court’s ruling on a
motion for a new trial for abuse of discretion.7
[3] Decisions regarding discovery are directed to the discre-
tion of the trial court and will be upheld in the absence of an
abuse of discretion.8
[4,5] When reviewing a jury verdict, the appellate court
considers the evidence and resolves evidentiary conflicts in
favor of the successful party.9 A jury verdict may not be set
aside unless clearly wrong, and it is sufficient if there is com-
petent evidence presented to the jury upon which it could find
for the successful party.10
6
Destiny 98 TD v. Miodowski, 269 Neb. 427, 693 N.W.2d 278 (2005).
7
Balames v. Ginn, 290 Neb. 682, 861 N.W.2d 684 (2015).
8
Moreno v. City of Gering, 293 Neb. 320, 878 N.W.2d 529 (2016).
9
See Chadron Energy Corp. v. First Nat. Bank, 236 Neb. 173, 459 N.W.2d
718 (1990).
10
Koster v. P & P Enters., 248 Neb. 759, 539 N.W.2d 274 (1995).
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[6,7] Generally, a trial court’s ruling in receiving or exclud-
ing an expert’s testimony which is otherwise relevant will be
reversed only when there has been an abuse of discretion.11
An abuse of discretion occurs when a trial court’s decision is
based upon reasons that are untenable or unreasonable or if
its action is clearly against justice or conscience, reason, and
evidence.12
[8] When an attorney fee is authorized, the amount of the
fee is addressed to the trial court’s discretion, and its ruling
will not be disturbed on appeal absent an abuse of discretion.13
V. ANALYSIS
[9] We first note that a number of ACI’s assignments of
error and arguments will not be addressed on this appeal. To be
considered by an appellate court, an error must be both specifi-
cally assigned and specifically argued in the brief of the party
asserting the error.14
First, ACI assigned a number of errors that it failed to argue.
ACI assigned that the district court erred in overruling both
ACI’s motions to dismiss BHMI’s counterclaims and ACI’s
motions to vacate the dismissal of ACI’s claims against BHMI.
However, in its argument section, ACI failed to alert this court
as to why ACI believes these rulings are in error. Not only
were we unable to locate any reference to these motions in
the body of ACI’s brief, but we were unable to locate within
the appellate record the district court’s orders overruling these
motions. For these reasons, we do not address the first two
assignments of error.
11
Robb v. Robb, 268 Neb. 694, 687 N.W.2d 195 (2004).
12
Hartman v. Hartman, 265 Neb. 515, 657 N.W.2d 646 (2003).
13
Gonzalez v. Union Pacific RR. Co., 282 Neb. 47, 803 N.W.2d 424 (2011);
Lamar Co. v. City of Fremont, 278 Neb. 485, 771 N.W.2d 894 (2009); In
re Estate of Chrisp, 276 Neb. 966, 759 N.W.2d 87 (2009).
14
In re Claims Against Pierce Elevator, 291 Neb. 798, 868 N.W.2d 781
(2015).
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ACI also assigns that the 2015 judgment should be vacated,
because BHMI failed to present sufficient evidence to sup-
port any of its counterclaims. However, ACI did not argue in
its brief that BHMI failed to present sufficient evidence as
to its tortious interference claim. Therefore, we only address
the sufficiency of the evidence as to BHMI’s Junkin Act and
breach of contract claims.
Second, ACI argues that several of the court’s rulings were
in error, but failed to assign those rulings as error. For example,
ACI argues that the district court erroneously allowed BHMI to
“taint the jury” with (1) evidence that ACI lost the 2014 trial,
(2) “the irrelevant fact” that ACI initially sued BHMI princi-
pals individually along with the company, and (3) evidence of
the Department of Justice’s second request for information.15
Because ACI failed to assign these rulings as error, we do not
consider them on appeal.
1. Motion to Vacate 2014 Judgment
The first issue is whether the district court abused its discre-
tion in overruling ACI’s motion to vacate the 2014 judgment
on the basis of denied discovery. In summary, ACI contends
that the district court should have vacated the 2014 judgment
and granted a new trial because it erroneously denied ACI
access to BHMI’s source code and manuals, thereby prohibit-
ing ACI from presenting the evidence needed to prevail on its
misappropriation claim.
Thus, in order to determine whether the district court
abused its discretion in overruling ACI’s motion to vacate
the 2014 judgment, we must determine whether the district
court erred in denying ACI’s requested discovery. Decisions
regarding discovery are directed to the discretion of the trial
court and will be upheld in the absence of an abuse of dis-
cretion.16 A judicial abuse of discretion exists when the rea-
sons or rulings of a trial judge are clearly untenable, unfairly
15
Brief for appellant at 47.
16
Moreno v. City of Gering, supra note 8.
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depriving a litigant of a substantial right and denying just
results in matters submitted for disposition.17
Parties are generally entitled to discovery regarding any
nonprivileged matter that is relevant to any claim or defense.18
However, under discovery rule § 6-326(c), the court has broad
discretion to limit the time, place, and manner of discovery as
required “to protect a party or person from annoyance, embar-
rassment, oppression, or undue burden or expense.” The court
also has broad discretion to modify the timing and sequence of
discovery “for the convenience of parties and witnesses and in
the interests of justice.”19
With regard to discovery of trade secret information,
§ 6-326(c)(7) specifically authorizes a trial court to enter a
protective order requiring that “a trade secret . . . not be dis-
closed or be disclosed only in a designated way.” It appears
that we have not discussed this specific section as it relates
to discovery of trade secret information, such as source code.
But because § 6-326(c)(7) is modeled after Fed. R. Civ. P.
26(c)(1)(G), we look to the federal decisions for guidance.20
[10,11] A review of federal decisions governing trade secret
discovery reveals that there is no talismanic procedure that may
be used to obtain the best results in any given case.21 Federal
courts have taken different approaches, depending on the facts
17
Arens v. NEBCO, Inc., 291 Neb. 834, 870 N.W.2d 1 (2015); Kercher v.
Board of Regents, 290 Neb. 428, 860 N.W.2d 398 (2015); Richards v.
McClure, 290 Neb. 124, 858 N.W.2d 841 (2015); Despain v. Despain, 290
Neb. 32, 858 N.W.2d 566 (2015); Fox v. Whitbeck, 286 Neb. 134, 835
N.W.2d 638 (2013).
18
§ 6-326(b)(1).
19
§ 6-326(d).
20
See Kellogg v. Nebraska Dept. of Corr. Servs., 269 Neb. 40, 690 N.W.2d
574 (2005).
21
Vesta Corp. v. Amdocs Management Ltd., 147 F. Supp. 3d 1147 (D. Or.
2015); DeRubeis v. Witten Technologies, Inc., 244 F.R.D. 676 (N.D. Ga.
2007); Microwave Research Corp. v. Sanders Associates, 110 F.R.D. 669
(D. Mass. 1986).
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of a specific case.22 In fact, one article on trade secret discov-
ery identifies nine different approaches.23 However, despite all
the various approaches, an overarching theme emerges; i.e., the
moving party’s need for the trade secret information must be
weighed against the injury that disclosure might cause the party
opposing the discovery.24 Here, the district court attempted to
balance these competing interests by requiring ACI to first
engage in non-trade-secret discovery to provide a factual basis
for its claim before risking harm to BHMI’s interest in TMS.
This approach is commonly used by federal courts,25 and we do
not find it to be untenable in the context of this case.
22
See Kevin R. Casey, Identification of Trade Secrets During Discovery:
Timing and Specificity, 24 AIPLA Q.J. 191 (1996).
23
Id.
24
In re Remington Arms Co., Inc., 952 F.2d 1029 (8th Cir. 1991); Casey,
supra note 22.
25
See, Vesta Corp. v. Amdocs Management Ltd., supra note 21, 147 F. Supp.
3d at 1154 (D. Or. 2015) (“[p]laintiff is required to identify the trade
secrets it claims Defendants misappropriated with reasonable particularity
before Defendants are required to produce their confidential information
and trade secrets to Plaintiff in discovery”); Puritan-Bennett Corp. v.
Pruitt, 142 F.R.D. 306, 308-09 (S.D. Iowa 1992) (“it is first incumbent
upon [the plaintiff] to make a showing that there is a substantial basis for
its claim”); Microwave Research Corp. v. Sanders Associates, supra note
21, 110 F.R.D. at 674 (D. Mass. 1986) (stating that “before a plaintiff is
entitled to the type of broad discovery into a defendant’s trade secrets, it
must show that other evidence which it has gathered through discovery
provides a substantial factual basis for its claim”); Xerox Corp. v.
International Business Machines Corp., 64 F.R.D. 367, 371-72 (S.D.N.Y.
1974) (“[a]t the very least, a defendant is entitled to know the bases for
plaintiff’s charges against it. The burden is upon the plaintiff to specify
those charges, not upon the defendant to guess at what they are. Thus,
after nearly a year of pre-trial discovery, [the plaintiff] should be able to
identify in detail the trade secrets and confidential information alleged to
have been misappropriated by [the defendant]”); Storagecraft Technology
Corp. v. Symantec Corp., No. 2:07cv856CW, 2009 WL 361282 at *2 (D.
Utah Feb. 11, 2009) (unpublished opinion) (“regardless of the approach,
it is apparent that ‘[t]he reasonable particularity standard requires that the
alleged trade secret be described “with adequate specificity to inform the
defendants what it is alleged to have misappropriated”’”).
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The course of discovery leading up to the first trial is per-
haps best summarized in the district court’s order overruling
ACI’s motion to continue the first trial:
The Court has held numerous discovery hearings as
well as hearings on the Motion for Summary Judgment.
With regard to discovery, particularly [ACI’s] efforts
to obtain BHMI’s source code, the Court has repeatedly
urged the parties to engage in discovery in order to deter-
mine whether there exists sufficient evidence to order the
disclosure of BHMI’s source code. The Court has repeat-
edly told the parties that it would strongly consider some
type of disclosure of BHMI’s source code provided some-
thing more than “strong suspicions” is used to support the
disclosure. . . .
....
Though this case was filed in September, 2012, no
depositions were taken at all in this case until May, 2013
when [ACI’s] representative, . . . Linberg, was deposed.
As of this writing in late June, 2014, so far as the Court
can tell, only 4 other depositions have been taken—those
of [d]efendants . . . Meeks, Karen Furst-Meeks, Jack . . .
and MasterCard representative . . . Birge.
Since the Court’s July 26, 2013 Order on discovery,
the only significant evidence presented to the Court by
[ACI] as to possible plagiarism is the affidavit of [ACI’s]
employee, . . . Newsom. In . . . Newsom’s affidavit
(Ex. 33) he states that he reviewed the emails transmit-
ting information from MasterCard to BHMI (Deposition
exhibits 24C-D, 25, 26-A-C, 27A-M, 32, 37, 38, 41,49,50,
52, 55, 69, 73,74) which reference attachments or mate-
rials by name or description and concludes: “30. Based
on my review of the documents detailed above, it is my
strongly held opinion that some of the materials and
documents provided by MasterCard to BHMI were never
in the MDS source code or configurations files. The only
source for these materials and documents are ACI’s [intel-
lectual property].”
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The emails referenced by . . . Newsom are from and
between some of the following individuals at MasterCard:
Larry Kjellberg, Glenn Leach, John Lovgren, Tom Wolak,
. . . LaRosa, [Hall], George Spies, Diane Dobleske, Mike
Obeidi, James Perkins and Ken Vagt—none of these peo-
ple have been deposed to find out what they actually sent,
received or attached to the correspondence.
[ACI] has repeatedly argued that . . . BHMI made ref-
erences to [MasterCard regarding] the intent and need for
MasterCard to produce XPNET materials to BHMI so that
it could develop TMS and that representations have been
made that XPNET and TMS are compatible or can inter-
face. One of the individuals that [ACI] believes asked for
such materials or made statements about compatibility
with XPNET, is . . . Lynne . . . yet she has never been
deposed to see if she even received such materials or why
she may have made such representations. . . .
....
. . . The Court believes that its approach to discovery
in this case is also quite orthodox and [ACI] has resisted
to this point the Court’s encouragement to engage in
vigorous non trade secret discovery in preference to its
own method of discovery knowing that the trial date
was approaching. The Court notes that according to
counsel for [BHMI] and MasterCard, their clients have
disclosed some 5,000 and 19,000 pages of documents,
respectively, to [ACI] during the course of this case. It
is not as if this Court has set an insurmountable bar to
further discovery.
To be absolutely clear, the Court has never taken
the position that [ACI] could not have access to the
source codes under any circumstances. The Court has
simply asked for evidence to be produced that supports
a certain level of probability that plagiarism occurred
before triggering the disclosure of the source code and
related materials.
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Given that ACI conducted little non-trade-secret discov-
ery, its need for trade secret discovery was much less than it
would have been had it exhausted all of its non-trade-secret
resources. In contrast, BHMI’s need to protect its trade secrets
from ACI was high, given that ACI is BHMI’s competitor and
could incorporate BHMI’s trade secrets into its own products.
Accordingly, we conclude that the district court did not abuse
its discretion in overruling ACI’s motions to compel produc-
tion of BHMI’s trade secrets, nor did it abuse its discretion
in overruling ACI’s motion to vacate the 2014 judgment.
Therefore, this assignment of error is without merit.
2. ACI’s Motion to Vacate
2015 Judgment
The next issue is whether the district court abused its discre-
tion in overruling ACI’s motions to vacate the 2015 judgment
for any of the following reasons: (a) the Noerr-Pennington
doctrine precludes BHMI’s antitrust and tortious interference
claims, (b) BHMI presented insufficient evidence to support
its antitrust and breach of contract claims, (c) BHMI presented
no cognizable evidence of damages to support any claim, (d)
ACI was denied discovery of BHMI’s trade secret informa-
tion, and (e) the email attachments were erroneously excluded
from evidence. We address each of these proposed reasons
in turn.
(a) Noerr-Pennington Doctrine
First, ACI argues that the 2015 judgment should have been
vacated because BHMI’s antitrust and tortious interference
claims were precluded by the Noerr-Pennington doctrine.
BHMI argues that Noerr-Pennington does not apply to those
claims and that even if it did, ACI waived the protection
of Noerr-Pennington by failing to raise it as an affirmative
defense. Before addressing whether ACI waived the protection
of Noerr-Pennington, we first set forth the principle known as
the Noerr-Pennington doctrine.
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[12] Under the Noerr-Pennington doctrine, a party is pro-
tected from tort liability for the act of filing a lawsuit.26 This
doctrine was named after the two U.S. Supreme Court cases
from which it originated: Eastern R. Conf. v. Noerr Motors27
and Mine Workers v. Pennington.28 Originally, the doctrine
exempted from antitrust laws certain petitioning of the courts
and administrative agencies that resulted in anticompetitive
effects.29 However, the doctrine was later extended to pro-
vide a defense to other kinds of claims where the filing of a
lawsuit is identified as the wrongful conduct, such as a claim
of malicious prosecution or tortious interference with a busi-
ness relationship.30
[13] No matter the context, however, Noerr-Pennington
does not protect a party from liability for the act of filing a
“sham” lawsuit.31 A lawsuit is a “sham” if it is both (1) objec-
tively baseless in the sense that no reasonable litigant could
expect success on the merits and (2) subjectively motivated by
bad faith.32
26
International Motor Contest Ass’n, Inc. v. Staley, 434 F. Supp. 2d 650
(N.D. Iowa 2006) (citing Porous Media Corp. v. Pall Corp., 186 F.3d 1077
(8th Cir. 1999); Eastern R. Conf. v. Noerr Motors, supra note 5; and Mine
Workers v. Pennington, supra note 5).
27
Eastern R. Conf. v. Noerr Motors, supra note 5.
28
Mine Workers v. Pennington, supra note 5.
29
International Motor Contest Ass’n, Inc. v. Staley, supra note 26.
30
Id. (citing State of S.D. v. Kansas City Southern Industries, 880 F.2d 40
(8th Cir. 1989), and Hufsmith v. Weaver, 817 F.2d 455 (8th Cir. 1987)).
See IGEN Intern., Inc. v. Roche Diagnostics GmbH, 335 F.3d 303 (4th Cir.
2003).
31
Professional Real Estate Investors, Inc. v. Columbia Pictures Industries,
Inc., 508 U.S. 49, 61, 113 S. Ct. 1920, 123 L. Ed. 2d 611 (1993).
32
International Motor Contest Ass’n, Inc. v. Staley, supra note 26 (citing
Porous Media Corp. v. Pall Corp., supra note 26, and Professional
Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., supra
note 31).
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We now turn to consider whether ACI waived any pro-
tection Noerr-Pennington may have provided by failing to
reference it in its answer to BHMI’s second amended coun-
terclaim. Because an affirmative defense must be pleaded
to be considered at the trial court level and on appeal,33 the
issue is whether the Noerr-Pennington doctrine is an affirma-
tive defense.
ACI argues that Noerr-Pennington is not an affirmative
defense and that BHMI “has the burden to prove that immu-
nity does not attach to the challenged activity.”34 In support
of its argument, ACI cites a footnote from the 11th Circuit’s
opinion in McGuire Oil Co. v. Mapco, Inc.35 The footnote
states, “Under the Sherman Act, Noerr-Pennington immunity
is not merely an affirmative defense. Rather, ‘the antitrust
plaintiff has the burden of establishing that the defendant
restrained trade unreasonably, which cannot be done when
the restraining action is that of the government.’”36 We do
not read this statement to mean that Noerr-Pennington is
not an affirmative defense; instead, we read it to mean that
although Noerr-Pennington is an affirmative defense, the anti-
trust plaintiff still has the burden to prove the elements of an
antitrust case. In other words, the statement dealt with burdens
of proof and not with the status of Noerr-Pennington as an
affirmative defense.
In contrast to ACI’s contention, the Fourth and Fifth
Circuits, as well as several state appellate courts, have all
held that the Noerr-Pennington doctrine is an affirmative
33
Neb. Ct. R. Pldg. § 6-1108(c). See Funk v. Lincoln-Lancaster Cty. Crime
Stoppers, 294 Neb. 715, 885 N.W.2d 1 (2016).
34
Reply brief for appellant at 1.
35
McGuire Oil Co. v. Mapco, Inc., 958 F.2d 1552 (1lth Cir. 1992).
36
Id. at 1558 n.9 (quoting Phillip E. Areeda & Herbert Hovenkamp, Antitrust
Law, An Analysis of Antitrust Principles and Their Application § 203.4c
(Supp. 1990)).
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defense.37 The Fifth Circuit held, for example, that “the
Noerr-Pennington doctrine should be raised as an affirma-
tive defense” and explained that generally, “a party’s failure
to raise an affirmative defense in its first responsive pleading
results in waiver.”38 We agree with these courts.
[14,15] An affirmative defense raises new matters which,
assuming the allegations in the petition to be true, constitutes
a defense to the merits of a claim asserted in the petition.39
Here, ACI’s claim of Noerr-Pennington immunity raised a new
matter, which if established, would constitute a defense to the
merits of, at least, BHMI’s antitrust counterclaim. Accordingly,
the Noerr-Pennington defense is an affirmative defense.
Nevertheless, ACI contends that even if Noerr-Pennington
is an affirmative defense, its failure to raise that defense in
the pleadings did not constitute waiver for two reasons. First,
ACI contends that the failure to plead the Noerr-Pennington
defense does not result in waiver because “[c]onstitutional
rights are presumed not to be waived,” and Noerr-Pennington
is rooted in the First Amendment’s right to petition the govern-
ment.40 We find this argument unpersuasive, however, because
other affirmative defenses that are rooted in the Constitution
are waived if not pled. For example, “truth” is an affirmative
defense in a defamation action, and despite the fact that it is
37
See, Waugh Chapel South v. United Food and Commercial, 728 F.3d 354
(4th Cir. 2013); Bayou Fleet, Inc. v. Alexander, 234 F.3d 852 (5th Cir.
2000); Lanzer v. Louisville, 2016 Ohio 8071, ___ N.E.3d ___ (2016);
Bauldau v. Jonkers, 229 W. Va. 1, 725 S.E.2d 170 (2011); Astoria
Entertainment, Inc. v. Debartolo, 12 So. 3d 956 (La. 2009); RRR Farms,
Ltd v. American Horse Protection, 957 S.W.2d 121 (Tex. App. 1997).
Contra Las Vegas Sands v. Culinary Local # 226, 82 Fed. Appx. 580,
585 (9th Cir. 2003) (“[f]or a plaintiff to succeed in invoking the sham
exception to defeat Noerr-Pennington immunity, a plaintiff must plead
with specificity the ‘sham-ful’ nature of the alleged interference”).
38
Bayou Fleet, Inc. v. Alexander, supra note 37, 234 F.3d at 860.
39
See Funk v. Lincoln-Lancaster Cty. Crime Stoppers, supra note 33.
40
Reply brief for appellant at 1.
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rooted in the First Amendment,41 it is waived if not pled.42
Additionally, we have held that sovereign immunity, which is
rooted in the 11th Amendment,43 is an affirmative defense that
is waived if not pled.44
Second, ACI suggests that we should adopt the rule set forth
in Bayou Fleet, Inc. v. Alexander45 that an “affirmative defense
is not waived if it is raised at a ‘pragmatically sufficient time,
and the plaintiff was not prejudiced in its ability to respond.’”
However, even if we adopted such a rule, we find that ACI
did not raise the Noerr-Pennington defense at a pragmatically
sufficient time. In Bayou Fleet, Inc., the motion for summary
judgment setting forth the defense of the Noerr-Pennington
doctrine had been filed 1 year before trial. Here, ACI did not
mention the Noerr-Pennington defense until the summary
judgment hearing on July 31, 2015, which occurred less than
2 months prior to the second trial and nearly 3 years after the
case began. And ACI did not attempt to amend its pleadings to
add the defense at that time.
Although prejudice to the plaintiff may be avoided in some
cases by a continuation of trial, such was not the case here.
Importantly, both parties in this case requested expedited dis-
covery, and at multiple hearings, BHMI expressed that the
litigation was having a negative effect on its ability to market
TMS and that continuation of the trial was not a favorable
option. The court also indicated that it was unwilling to con-
tinue trial. In light of these facts, we conclude that even if we
41
See Cox Broad. Corp. v. Cohn, 420 U.S. 469, 490, 95 S. Ct. 1029, 43 L.
Ed. 2d 328 (1975) (“the defense of truth is constitutionally required where
the subject of the publication is a public official or public figure”).
42
McCune v. Neitzel, 235 Neb. 754, 457 N.W.2d 803 (1990).
43
See Doe v. Board of Regents, 280 Neb. 492, 788 N.W.2d 264 (2010).
44
Fuhrman v. State, 265 Neb. 176, 182, 655 N.W.2d 866, 873 (2003)
(“sovereign and qualified immunity are affirmative defenses which should
be affirmatively pleaded or are considered waived”).
45
Bayou Fleet, Inc. v. Alexander, supra note 37, 234 F.3d at 860.
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adopted an exception to the rule that affirmative defenses are
required to be plead, such exception would not apply here.
We note that on September 11, 2015, 3 days before the
second trial, ACI filed a motion requesting leave to file
an amended answer to add the Noerr-Pennington defense.
Because ACI took the position that Noerr-Pennington was not
an affirmative defense, the district court overruled the motion,
reasoning that the pleadings need only set forth affirmative
defenses. Because ACI did not assign or argue that this rul-
ing was in error, we do not address on appeal whether the
district court erred in overruling ACI’s motion to amend
its pleadings.46
Because we find that ACI waived the Noerr-Pennington
defense by failing to raise it as an affirmative defense, the
district court did not abuse its discretion in overruling ACI’s
motion to vacate the 2015 judgment for this reason.
(b) Sufficiency of Evidence
ACI next assigns that the 2015 judgment should have been
vacated, because BHMI did not present sufficient evidence
to support the jury’s verdict on the Junkin Act and breach of
contract claims. When reviewing a jury verdict, the appellate
court considers the evidence and resolves evidentiary conflicts
in favor of the successful party.47 A jury verdict may not be
set aside unless clearly wrong, and it is sufficient if there is
competent evidence presented to the jury upon which it could
find for the successful party.48
(i) Junkin Act
We first consider the sufficiency of the evidence to support
BHMI’s Junkin Act claim. The Junkin Act makes it illegal
to “monopolize, or attempt to monopolize, or combine or
46
In re Claims Against Pierce Elevator, supra note 14.
47
Chadron Energy Corp. v. First Nat. Bank, supra note 9.
48
Koster v. P & P Enters., supra note 10.
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conspire with any other person or persons, to monopolize any
part of the trade or commerce.”49 The Junkin Act allows “[a]ny
person who is injured in his or her business or property” by
a violation of the Junkin Act to recover damages and costs of
suit, including a reasonable attorney fees.50
[16,17] For purposes of the Junkin Act, monopolization
consists of two elements: (1) the possession of monopoly
power in the relevant market and (2) the willful acquisition
or maintenance of that power as distinguished from growth or
development as a consequence of a superior product, business
acumen, or historic accident.51 The existence of monopoly
power ordinarily is inferred from the seller’s possession of a
predominant share of the market.52
[18-20] Despite the broad remedial language of the Junkin
Act, not every person claiming an injury from a Junkin
Act violation can recover damages.53 To recover damages,
a plaintiff must prove an antitrust injury.54 To constitute an
antitrust injury, the injury must reflect the anticompetitive
effect of the violation or the anticompetitive effects of anti-
competitive acts made possible by the violation.55 As noted
by the 11th Circuit in Jacobs v. Tempur-Pedic Intern., Inc.,56
“Actual anticompetitive effects include, but are not limited
49
§ 59-802.
50
§ 59-821.
51
Health Consultants v. Precision Instruments, 247 Neb. 267, 527 N.W.2d
596 (1995) (citing Eastman Kodak Co. v. Image Technical Services, Inc.,
504 U.S. 451, 112 S. Ct. 2072, 119 L. Ed. 2d 265 (1992)).
52
Eastman Kodak Co. v. Image Technical Services, Inc., supra note 51.
53
See Kanne v. Visa U.S.A., 272 Neb. 489, 723 N.W.2d 293 (2006).
54
See, § 59-821; Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S.
477, 97 S. Ct. 690, 50 L. Ed. 2d 701 (1977).
55
Id.
56
Jacobs v. Tempur-Pedic Intern., Inc., 626 F.3d 1327, 1339 (11th Cir.
2010).
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to, reduction of output, increase in price, or deterioration
in quality.”
With respect to BHMI’s Junkin Act claim, ACI argues only
that there was insufficient evidence of an “antitrust injury”; it
does not argue that there was insufficient evidence to establish
any other element of BHMI’s Junkin Act claim.
ACI argues that BHMI did not present evidence of an
antitrust injury because it did not show any anticompetitive
effects of ACI’s Junkin Act violation. In support of that argu-
ment, ACI cites Cobb Theatres III v. AMC Entertainment
Holdings,57 for the proposition that to support an award of
damages, “competition must be shown not through harm to
the plaintiff, but though market-wide impact such as increased
prices, reduced output, or reduced product quality resulting
from the defendant’s conduct.”58 ACI argues that BHMI failed
to prove increased prices, reduced output, or reduced product
quality; therefore, ACI claims, BHMI has not shown an anti-
trust injury.
Although we note that the court in Cobb Theatres III did
not limit evidence of an antitrust injury to those three factors,59
we conclude that BHMI did submit evidence of those factors.
For example, BHMI presented evidence of a reduced output
and an increased price when it showed that, by keeping TMS
out of the market, ACI deprived consumers and the market of
a more affordable option. In fact, multiple witnesses testified
that TMS could not be marketed because of ACI’s lawsuit, and
57
Cobb Theatres III v. AMC Entertainment Holdings, 101 F. Supp. 3d 1319
(N.D. Ga. 2015).
58
Brief for appellant at 34.
59
See Cobb Theatres III v. AMC Entertainment Holdings, supra note 57
(quoting Jacobs v. Tempur-Pedic Intern., Inc., supra note 56, 626 F.3d at
1339, for proposition that “[a]ctual anticompetitive effects include, but are
not limited to, reduction of output, increase in price, or deterioration in
quality” (emphasis supplied)).
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O’Neil testified that TMS was approximately half the price of
XPNET. BHMI also presented evidence of reduced product
quality. Specifically, BHMI presented evidence that TMS was
capable of running on multiple platforms, while XPNET could
run only on HP NonStop hardware. Thus, the jury could infer
that the market was deprived of higher quality software with
additional features.
Based on the evidence set forth above, we conclude that
BHMI presented competent evidence upon which the jury
could find that BHMI sustained an antitrust injury. Therefore,
the jury was not clearly wrong in finding in favor of BHMI
on its Junkin Act claim, and the district court did not abuse its
discretion in overruling ACI’s motion to vacate the 2015 judg-
ment for this reason.
(ii) Breach of Contract
ACI also claims that BHMI presented insufficient evidence
to support the jury’s finding that ACI violated the NDA. In
this regard, ACI sets forth two arguments. First, ACI contends
that because the NDA protected only “non-public informa-
tion,” ACI could not have breached the agreement, because the
allegations in ACI’s complaint are public.60 Second, ACI sug-
gests that the jury misinterpreted the NDA to be a “‘never sue
agreement.’”61 We address both of these arguments in turn and
find neither to have any merit.
[21,22] The interpretation of a contract is a question of law,
in connection with which an appellate court has an obliga-
tion to reach its conclusions independently of the determina-
tions made by the court below.62 When the terms of a contract
are clear, they are to be accorded their plain and ordinary
60
Brief for appellant at 33.
61
Id.
62
Fitzgerald v. Community Redevelopment Corp., 283 Neb. 428, 811 N.W.2d
178 (2012).
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meaning.63 As noted above, paragraph 2(c) of the NDA pro-
vides, in relevant part: “For the avoidance of doubt, [ACI]
understands and agrees that in no event shall [ACI] utilize
the Confidential Information of [BHMI] in any manner what-
soever . . . (iii) in any legal action directed toward [BHMI]
or its vendors, representatives, agents, or customers . . . .”
(Emphasis supplied.)
The terms of the NDA are clear: ACI was not to use
BHMI’s confidential information “in any manner whatso-
ever,” including to form the basis of ACI’s lawsuit against
BHMI. In ACI’s complaint against BHMI, ACI alleged that
“BHMI agreed to allow ACI representatives to conduct an
examination of the operations, configurations, and applica-
tion programming manuals related to [TMS]” and that “[a]s a
result of the inspection, ACI found a high degree of concep-
tual similarity . . . .”
Although ACI did not disclose the specifics of the confi-
dential information within the complaint, the NDA did not
prohibit ACI from merely disclosing the information; it pro-
hibited ACI from utilizing the information in any manner
whatsoever, including in a legal action directed toward BHMI
or its customers. Based on these allegations, we conclude that
the jury did not commit clear error in finding that ACI utilized
BHMI’s confidential information to form the basis of its law-
suit in direct violation of the NDA.
Turning to ACI’s second argument, we disagree that the
NDA was misinterpreted as a “never sue agreement.” The
language of the NDA does not preclude a legal action against
BHMI. It simply precluded ACI from using in a legal action
the information that BHMI provided to it during the course of
63
Pavers, Inc. v. Board of Regents, 276 Neb. 559, 755 N.W.2d 400 (2008);
Katherine R. Napleton Trust v. Vatterott Ed. Ctrs., 275 Neb. 182, 745
N.W.2d 325 (2008); Sayah v. Metropolitan Prop. & Cas. Ins. Co., 273
Neb. 744, 733 N.W.2d 192 (2007).
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the meetings. The same information could have been obtained
and used against BHMI through proper methods such as tradi-
tional discovery.
Accordingly, we find sufficient competent evidence to sup-
port the jury verdict that ACI violated the NDA. Therefore, the
district court did not abuse its discretion in overruling ACI’s
motion to vacate the 2015 judgment for this reason.
(c) Evidence of Damages
ACI next assigns that the district court erred in overrul-
ing its motion to vacate the 2015 judgment, because BHMI
presented “no cognizable evidence of damages to support any
claim.” In this regard, ACI sets forth two arguments. First,
ACI argues that Jack’s opinion about BHMI’s lost profits
should not have been admitted because he was not qualified
to testify as an expert. Second, ACI argues that even if Jack
was qualified to testify, the evidence he presented was insuf-
ficient to support the jury’s award of $43,806,362.70. We
address each of these arguments in turn and find neither to
have any merit.
(i) Jack’s Qualification as
Expert Witness
Generally, a trial court’s ruling in receiving or excluding
an expert’s testimony which is otherwise relevant will be
reversed only when there has been an abuse of discretion.64
An abuse of discretion occurs when a trial court’s decision is
based upon reasons that are untenable or unreasonable or if
its action is clearly against justice or conscience, reason, and
evidence.65
An expert’s opinion is ordinarily admissible under Neb. Rev.
Stat. § 27-702 (Reissue 2016) if the witness (1) qualifies as
an expert, (2) has an opinion that will assist the trier of fact,
64
Robb v. Robb, supra note 11.
65
Hartman v. Hartman, supra note 12.
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(3) states his or her opinion, and (4) is prepared to disclose the
basis of that opinion on cross-examination.66
ACI argues that the district court erred in finding that Jack
was qualified to testify about BHMI’s future lost profits,
because Jack was not formally trained in performing a lost
profits analysis and did not have an accounting degree.
[23-25] However, there is no exact standard for fixing the
qualifications of an expert witness, and a trial court is allowed
discretion in determining whether a witness is qualified to
testify as an expert. Unless the court’s finding is clearly erro-
neous, such a determination will not be disturbed on appeal.67
Experts or skilled witnesses will be considered qualified if
they possess special skill or knowledge respecting the subject
matter involved superior to that of persons in general, so as
to make the expert’s formation of a judgment a fact of proba-
tive value.68 And a witness may qualify as an expert by vir-
tue of either formal training or actual practical experience in
the field.69
As BHMI points out, we have previously allowed princi-
pals of businesses to opine regarding lost profits suffered by
their businesses. For example, we found that the owner of
farmland had sufficient basis to opine on lost profits resulting
from a decrease in crop yields,70 that a principal stockholder
of a manufacturing business was qualified to testify about lost
profits of that business,71 and that the owner of a distributor-
ship was qualified to testify regarding lost profits suffered by
his business.72 Although we allowed owners to testify on lost
66
Heistand v. Heistand, 267 Neb. 300, 673 N.W.2d 541 (2004).
67
State v. Daly, 278 Neb. 903, 775 N.W.2d 47 (2009).
68
Id.
69
Id.
70
Lesiak v. Central Valley Ag Co-op, 283 Neb. 103, 808 N.W.2d 67 (2012).
71
Alliance Tractor & Implement Co. v. Lukens Tool & Die Co., 204 Neb.
248, 281 N.W.2d 778 (1979).
72
Diesel Service, Inc. v. Accessory Sales, Inc., 210 Neb. 797, 317 N.W.2d
719 (1982).
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profits, we note that in each case, it was the practical experi-
ence of the owner as it relates to that particular business which
established the foundation for the opinion, not just ownership.
The same is true here.
Jack’s knowledge about BHMI’s lost profits is clearly supe-
rior to that of persons in general. Jack handles all of BHMI’s
finances and has had 30 years’ practical experience running
BHMI. Jack is knowledgeable about the costs incurred to
develop and license TMS. He is aware of BHMI’s current and
potential customers and the prices BHMI charges for its licens-
ing. For these reasons, we find the district court did not commit
clear error in finding that Jack was qualified to testify, did not
abuse its discretion in allowing Jack to opine on BHMI’s lost
profits, and did not abuse its discretion in overruling ACI’s
motion to vacate the 2015 judgment due to the qualifications
of Jack.
(ii) Sufficiency of Damages Evidence
ACI also contends that BHMI’s damages evidence was
insufficient, because Jack failed to account for certain costs in
his future lost profits calculation and because BHMI failed to
offer business records to support his calculation.
[26] A plaintiff’s burden of offering evidence sufficient
to prove damages cannot be sustained by evidence which is
speculative and conjectural, but proof of damages to a math-
ematical certainty is not required; the proof is sufficient if
the evidence is such as to allow the trier of fact to estimate
actual damages with a reasonable degree of certainty and
exactness.73
a. Costs
ACI argues that BHMI’s damages evidence was insufficient,
because Jack failed to take into account (1) costs of developing
new versions of TMS, (2) maintenance costs, and (3) general
overhead costs.
73
Pribil v. Koinzan, 266 Neb. 222, 665 N.W.2d 567 (2003).
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As for costs of developing new versions of TMS, ACI
asserts that Jack “admitted that, although BHMI would expect
to release subsequent versions of TMS during the twelve-year
period of his damages model, his model did not include the
costs of developing those new versions.”74 However, Jack’s
testimony in this regard is as follows:
Q. . . . [T]here certainly would have been new versions
developed of TMS over a 12-year period? Can we agree
with that?
A. No, sir, I don’t necessarily agree with that.
Q. All right. So software companies don’t routinely
come up with version 1.0 and 1.2? That would never hap-
pen with your software, right?
....
A. They may or may not, sir.
Q. But you didn’t figure that in. You just figured for
12 straight years TMS — there would be no new versions
whatsoever, correct?
A. I extrapolated costs and revenue based on what we
had seen and what I knew.
Q. That’s not my question. You said you did not
believe that there would be any new versions over a
12-year period for TMS, correct?
A. I’m not sure I said that. I’m saying that I don’t
know, but there may or may not be.
Whether or not new versions of TMS would have been
developed is a question of fact for the jury. Resolving this evi-
dentiary conflict in favor of BHMI, we conclude that it would
be speculative to attribute costs to the development of new
versions of TMS, because it is unknown whether new versions
of TMS would be released.
We turn now to the “maintenance costs” and “general over-
head costs” which ACI asserts BHMI was required to account
74
Brief for appellant at 39.
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for but failed to do so.75 To support its assertion that Jack
failed to account for “maintenance costs,” ACI points to the
following testimony:
Q. Isn’t there a cost to your company to provide the
maintenance?
A. Not really. Not in the case of TMS. We have not
seen that cost. For example, if people call and say, “I’ve
got a problem” or “I need to do something,” we don’t
have a separate help desk facility. Certainly not one that’s
dedicated to TMS.
Essentially, if somebody calls in for any reason for
any of our products, we will assign the question or the
issue or the problem to one of our staff members who’s
doing that along with other duties. So essentially that is
what is considered to be a fixed cost to deal with those
kinds of issues. So it’s not really a cost that comes out
of our pocket as such because we’re already paying
that individual for doing that kind of work plus oth-
ers. So it’s not a particular cost allocated specifically
against TMS.
[27] Based on Jack’s testimony, it is clear that the above
“maintenance costs” are overhead costs. Overhead costs are
business expenses that cannot be allocated to a particular serv
ice or product.76 BHMI’s cost of employees to run the help
desk is an overhead cost because it cannot be allocated spe-
cifically to TMS or any other product or service. Accordingly,
ACI’s arguments about “maintenance costs” and “general over-
head costs” run together and present the same issue.
In support of ACI’s argument that Jack should have taken
BHMI’s general overhead costs into account, ACI cites Home
Pride Foods v. Johnson.77 ACI argues that this case shows
75
Id.
76
Black’s Law Dictionary 1278 (10th ed. 2014). See, also, 177 Neb. Admin.
Code, ch. 5, § 003 (2006).
77
Home Pride Foods v. Johnson, 262 Neb. 701, 634 N.W.2d 774 (2001).
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that Nebraska law requires that overhead costs be taken into
account in lost profits analyses. However, we do not find such
a requirement in our reading of Home Pride Foods.
In Home Pride Foods, we held that a plaintiff has not pre-
sented sufficient evidence of lost profits where he or she pre
sents only evidence of gross profits and does not present evi-
dence of any costs. In that case, the plaintiff had not presented
any evidence of any costs, including overhead costs. But we
never held that the plaintiff was required to subtract overhead
costs from its revenue in calculating its lost profits. Instead, we
concluded that the plaintiff failed to present sufficient evidence
to support an award of damages, because only net profits are
recoverable, and that the plaintiff’s net profits could not be
calculated where there was no evidence of costs.
Contrary to ACI’s argument on appeal, “‘[t]he weight of
authority holds that fixed overhead expenses need not be
deducted from gross income to arrive at the net profit properly
recoverable.’”78 This rule has been explained:
“The true rule seems to be that the prospective profits
should be diminished by charges composing an essential
element in the cost to manufacture . . . . Essential ele-
ments in such cost do not include remote costs, over-
head or otherwise, but are confined to expenditures that
would necessarily have been made in the performance
of the contract. The only matter of concern is the detri-
ment suffered or benefit lost as a result of the breach. If
the fixed expenses neither increased nor decreased as a
consequence of the nonperformance of the contract, there
would be no loss or benefit arising from that factor.”79
78
Vanwyk Textile Systems v. Zimmer Mach. Amer., Inc., 994 F. Supp. 350,
383 (W.D.N.C. 1997).
79
1 Robert L. Dunn, Recovery of Damages for Lost Profits § 6.5 at 487-88
(6th ed. 2005) (quoting Oakland Cal. Towel Co. v. Sivils, 52 Cal. App.
2d 517, 126 P.2d 651 (1942)). Accord Vanwyk Textile Systems v. Zimmer
Mach. Amer., Inc., supra note 78.
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Here, consistent with the rule in Home Pride Foods, BHMI
presented evidence of its lost net profits by presenting evi-
dence of lost revenue and evidence of the expenses attributable
to TMS. We therefore conclude that BHMI presented suffi-
cient evidence upon which the jury could reasonably estimate
BHMI’s lost net profits.
b. Supporting Financial Data
ACI also argues that BHMI’s evidence of damages was
insufficient because BHMI “failed to offer any quantifiable
business records (income tax return, proft/loss statements or
business records) to support its future lost profits calculation.”80
In support of its argument, ACI cites Evergreen Farms v.
First Nat. Bank & Trust 81 and World Radio Labs. v. Coopers
& Lybrand.82 In Evergreen Farms, we held that a claim for
lost profits must be supported by “some financial data which
permit an estimate of the actual loss to be made with reason-
able certitude and exactness.”83 In that case, we found that
the plaintiff had not submitted sufficient evidence to sustain
the jury’s award of damages where the only evidence of dam-
ages was the testimony of one of the partners of Evergreen
Farms (Evergreen). In calculating Evergreen’s lost profits,
the partner assumed that Evergreen would be paid to feed
an additional 2,000 head of cattle at a rate of 10 cents per
head. Not only were these numbers not supported by any of
Evergreen’s financial documents, but the numbers were not
based on any reliable evidence. The partner provided no basis
for his assumption that Evergreen would have made 10 cents
80
Brief for appellant at 38.
81
Evergreen Farms v. First Nat. Bank & Trust, 250 Neb. 860, 553 N.W.2d
728 (1996).
82
World Radio Labs. v. Coopers & Lybrand, 251 Neb. 261, 557 N.W.2d 1
(1996).
83
Evergreen Farms v. First Nat. Bank & Trust, supra note 81, 250 Neb. at
868, 553 N.W.2d at 734.
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per head of cattle, and the partner’s assumption that Evergreen
would have had an additional 2,000 head of cattle was based
on “the fact that Evergreen was feeding 3,500 to 4,000 head
of cattle and ‘all of a sudden we dropped down to from 1,500
to 2,000 for two years.’”84 Because we determined that this
evidence was too speculative and conjectural, we held that
Evergreen’s damages evidence was insufficient to support the
jury’s award.
In World Radio Labs., we also found that the damages
evidence was insufficient. In that case, the plaintiff’s chief
financial officer estimated lost profits by assuming that the
plaintiff would have made the same amount of profit that
it did during another time period. We concluded that the
chief financial officer’s testimony was too speculative and
conjectural because his estimation “failed to account for the
many differences in the business between [the] time periods
[being compared].”85
Even if we interpreted these two cases, as ACI urges, to
require a plaintiff to submit business records to support its
claim for lost profits, we conclude that BHMI did submit
business records to support its claim. The prices Jack used in
his lost profits analysis were based on actual contracts that he
negotiated with MasterCard and FNBO for BHMI, which were
received into evidence.
We further note that Jack’s lost profits analysis was not
solely supported by his own testimony, but also by the testi-
mony of Scheer and Saltwick. Scheer testified that given the
level of interest expressed by target customers, it was reason-
able for BHMI to expect to license TMS to two customers per
year. Saltwick testified that he agreed there was “significant
market demand for solutions . . . to replace ACI software.”
In a market of 300 customers, a “significant market demand”
84
Id. at 867, 553 N.W.2d at 734.
85
World Radio Labs. v. Coopers & Lybrand, supra note 82, 251 Neb. at 281,
557 N.W.2d at 13.
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would surely encompass two customers per year, which is less
than 1 percent of the market.
For the foregoing reasons, we conclude that BHMI pre-
sented sufficient evidence to allow the jury to estimate actual
damages with a reasonable degree of certainty and exactness.
We therefore find that the district court did not abuse its discre-
tion in overruling ACI’s motion to vacate the 2015 judgment
for this reason.
(d) Denied Discovery
ACI next assigns that the district court erred in overrul-
ing its motion to vacate the 2015 judgment because ACI was
denied discovery of BHMI’s trade secrets. We have previ-
ously addressed this issue with regard to the 2014 judgment. A
review of the record reveals that after the first trial and before
the second trial, ACI never filed a motion to compel the dis-
covery of BHMI’s trade secrets. Thus, for the same reasons set
forth in the section on the 2014 judgment, we conclude that the
district court did not abuse its discretion in overruling ACI’s
motion to vacate the 2015 judgment.
(e) Exclusion of Email Attachments
Next, ACI assigns that the district court erred in overruling
its motion to vacate the 2015 judgment because it excluded
evidence that would allow ACI to show that it filed the original
lawsuit with good faith. The only evidence that ACI argues was
improperly excluded was the evidence that ACI obtained in the
federal litigation and evidence that ACI survived motions to
dismiss and motions for summary judgment.
[28,29] In proceedings where the Nebraska Evidence
Rules apply, the admissibility of evidence is controlled by the
Nebraska Evidence Rules; judicial discretion is a factor only
when the rules make such discretion a factor in determining
admissibility.86 To constitute reversible error in a civil case,
86
Nickell v. Russell, 260 Neb. 1, 614 N.W.2d 349 (2000).
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the admission or exclusion of evidence must unfairly prejudice
a substantial right of the litigant complaining about evidence
admitted or excluded.87
We first address ACI’s claim that the district court errone-
ously excluded the evidence obtained in the federal litigation.
After reviewing the record, we conclude that the district court
did not make a ruling on the admissibility of such evidence
because that evidence was never offered during the trial. The
record reflects that at a hearing on July 31, 2015, ACI first
offered exhibit 314, which was the emails and attachments
obtained in the federal litigation, in support of its motion to
vacate the 2014 judgment.
On August 26, 2015, ACI filed a motion requesting that the
court rule on the admissibility of exhibit 314 for purposes of
the second trial, and it set the motion for hearing on September
14, which was the first day of the trial. However, we have no
record of that hearing, no record of the district court’s ruling
on its admissibility, and no record that ACI ever offered exhibit
314 during the trial.
[30] Generally, a motion which is never called to the atten-
tion of the court is presumed to have been waived or aban-
doned by the moving party, and, where no ruling appears to
have been made on a motion, the presumption is, unless it
otherwise appears, that the motion was waived or abandoned.88
Because no ruling appears to have been made on the motion,
we find that the motion was either waived or abandoned. And
because we find no evidence that ACI ever offered exhibit
314 at the trial, we cannot say that the district court abused
its discretion in not admitting it where it was never given the
opportunity to do so.
Even if the evidence obtained in the federal trial had been
improperly excluded, we fail to see how such exclusion would
87
Id.
88
Hiway 20 Terminal, Inc. v. Tri-County Agri-Supply, Inc., 235 Neb. 207,
454 N.W.2d 671 (1990).
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have unfairly prejudiced ACI. In other words, we fail to see
how the evidence obtained during the federal trial would have
showed that ACI’s claim was filed with good faith and not with
the purpose of interfering with BHMI’s business expectations.
It is undisputed that ACI did not have the materials contained
within exhibit 314 at the time it filed the initial lawsuit against
BHMI and thus these materials could not have formed the
basis of its suit.
We now turn to ACI’s argument that the district court erro-
neously excluded testimony that ACI survived motions to
dismiss and motions for summary judgment. ACI argues that
the district court should have allowed the testimony, because
it would have showed that ACI’s lawsuit was not a “‘sham
exception’” for purposes of the Noerr-Pennington defense.89
However, because we held that ACI waived Noerr-Pennington
by failing to plead it as a defense, we cannot find that the
district court abused its discretion in excluding this evidence
where it had no prejudicial effect on ACI.
Because there is no record that ACI ever offered exhibit
314 at the trial and because the testimony at issue would have
had no prejudicial effect on ACI, we cannot find that the dis-
trict court erroneously excluded this evidence. We therefore
conclude that the district court did not abuse its discretion in
overruling ACI’s motion to vacate the 2015 judgment for this
reason, and we find this error is without merit.
3. Attorney Fees
Lastly, ACI assigns that the district court abused its discre-
tion in awarding BHMI $2,732,962.50 in attorney fees and
costs. We note that ACI does not argue that BHMI was not
entitled to costs and attorney fees; § 59-821 allows a party
injured by a violation of the Junkin Act to recover the costs
of suit, including a “reasonable attorney’s fee.” Instead, ACI
89
Brief for appellant at 47 (citing Professional Real Estate Investors, Inc. v.
Columbia Pictures Industries, Inc., supra note 31).
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argues that the amount of the award was an abuse of discre-
tion for two reasons. First, ACI argues that the district court
could not have applied the factors set forth in our case law for
determining a reasonable attorney fee, because BHMI did not
offer legal invoices into evidence. Second, ACI argues that the
district court had no basis for multiplying BHMI’s rate.
[31] We have generally said that if an attorney seeks a
statutory attorney fee, that attorney should introduce at least
an affidavit showing a list of the services rendered, the time
spent, and the charges made.90 Here, BHMI submitted into
evidence an affidavit executed by Davidson, the chair of a
local law firm’s litigation section, attesting to the reason-
ableness of the fees submitted by the law firm representing
BHMI. In the affidavit, Davidson set forth the hours and
rates of the attorneys and professional staff who worked on
the case, which was based upon a detailed summary of work
provided by counsel for BHMI. We note that ACI did not
submit any evidence to dispute the contents of the affidavit.
Although BHMI did not submit any legal invoices into evi-
dence, we are unaware of any relevant information that would
have been contained in the legal invoice that was not also
in Davidson’s affidavit. Based on our review of the affida-
vit, we conclude that it provided sufficient information upon
which the district court could determine proper and reasonable
attorney fees.
[32] We now turn to ACI’s argument that the district court
abused its discretion in applying a multiplier to the fee. When
an attorney fee is authorized, the amount of the fee is addressed
to the trial court’s discretion, and its ruling will not be dis-
turbed on appeal absent an abuse of discretion.91 An award
of attorney fees involves consideration of such factors as the
nature of the case, the services performed and results obtained,
90
Black v. Brooks, 285 Neb. 440, 827 N.W.2d 256 (2013).
91
See cases cited supra note 13.
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the length of time required for preparation and presentation of
the case, the customary charges of the bar, and general equities
of the case.92
Here, the district court found that the high risk and complex
nature of the case warranted significant attorney fees, explain-
ing that antitrust actions are one of the most difficult actions
to litigate. Moreover, the court noted that the subject matter
of the case involved highly technical issues relating to soft-
ware and concepts such as source code, object code, applica-
tion programming interfaces, “wrappers, literals, defines, and
other technical concepts that are not generally understood by
laypeople.” The court further noted that the case was vigor-
ously contested by both parties and involved two protracted
jury trials.
As for the services performed, the district court found
that claims under the Junkin Act have rarely been litigated
in Nebraska and that prosecuting such a claim required skill,
care, and diligence. Moreover, the work involved extensive
discovery and research, working with experts, and strategiz-
ing for and attending trial, among other tasks. The parties
exchanged “tens of thousands” of pages of documents during
the course of discovery and were required to review “tens of
thousands” of other documents from nonparties. Additionally,
the case involved numerous depositions, which required the
parties to travel out of state to St. Louis, Missouri, and
Chicago, Illinois.
As for the results obtained, the district court found that
BHMI’s case was the only case within the last 100 years
where a party successfully proved a Junkin Act claim. The
court further noted that counsel for BHMI obtained an
“excellent result” for BHMI, which warranted an enhance-
ment of the attorney fees. As for the length of time required
to prepare the case, the district court found that the case
involved extended litigation, which required BHMI’s attorneys,
92
See Sitz v. Sitz, 275 Neb. 832, 749 N.W.2d 470 (2008).
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paralegals, and technical support staff to devote over 2,800
hours to the case.
After reviewing the district court’s detailed explanation for
its award of attorney fees, we agree that the above factors
support a significant attorney fee. We therefore find that the
district court did not abuse its discretion in awarding BHMI
$2,732,962.50.
VI. CONCLUSION
For the reasons set forth above, we conclude that the district
court did not abuse its discretion in overruling ACI’s motions
to vacate the 2014 and 2015 judgments and did not abuse its
discretion in awarding BHMI $2,732,962.50 in attorney fees.
We therefore affirm.
A ffirmed.
Miller-Lerman, J., not participating.