In Taxinet Corp. v. Leon, No. 22-12335 (11th Cir. Aug. 19, 2024), the Eleventh Circuit affirms judgment as a matter of law that wiped out a $300 million jury verdict on a state law unjust-enrichment claim, after the district court held that it erred in admitting hearsay valuation evidence. Yet the panel exercises discretion to remand the case for a new trial on damages out of consideration that the plaintiff relied on the erroneous evidentiary rulings at trial.
“Taxinet Corporation sued [defendant] Leon, asserting a number of claims arising from what began as a joint effort to gain a government concession for a taxi-hailing app in Mexico City.” The district court allowed Taxinet’s Florida-law unjust enrichment claim to go to the jury. After a five-day trial, “[t]he jury found in favor of Taxinet on its unjust enrichment claim and awarded it $300 million.”
Plaintiff presented no expert damages evidence. Instead, the main evidence of damages was a 2018 Goldman Sachs valuation of defendant’s enterprise L1bre at $2.4 billion. Taxinet argued that L1bre, owned by Leon, benefitted from the government’s concession before Leon withdrew from the joint venture. According to the defendant’s own testimony, “L1bre had engaged Goldman Sachs as its investment banker when other companies had made approaches about strategic alliances or joint ventures. Goldman Sachs fixed the ‘enterprise value’ of the Mexico City concession at $2.4 billion.”
While the district court excluded the Goldman Sachs itself report on hearsay grounds, it nevertheless allowed plaintiff’s witnesses to repeatedly cite it in their testimony.
Following the verdict, recognizing its own evidentiary error, “the district court granted Mr. Leon’s renewed [Federal Rule of Civil Procedure] 50(b) motion for judgment as a matter of law, concluding that the award of damages was based on hearsay evidence that had been improperly admitted and was speculative.” The district court held that, after excluding the inadmissible evidence, the record was insufficient to support a finding of any damages and entered judgment for the defendant.
The Eleventh Circuit affirms the judgment as a matter of law as to damages. “The Rule 50 question, in light of Weisgram [v. Marley Co., 528 U.S. 440 (2000)] is whether all of the properly admitted evidence—viewed in the light most favorable to Taxinet—allowed the jury to award unjust enrichment damages of $300 million.”
The panel agrees with the district court that the hearsay damages evidence was improperly admitted and could not be considered in reviewing the Rule 50(b) order. While recognizing the commonplace principle that the owner of a business is ordinarily competent to testify as to its value, “[u][nder Rule 701(a) of the Federal Rules of Evidence, [such] lay opinion testimony is ‘limited’ to opinions that (as relevant here) are ‘rationally based’ on the witness’ ‘perception.’” A business owner may not rely entirely on the hearsay valuation of another. “Admittedly, the line is sometimes difficult to discern, but the owner must have some basis for providing an opinion that is his own; he cannot simply serve as the mouthpiece for otherwise inadmissible hearsay.”
“Here, the district court did not abuse its discretion in concluding that it had mistakenly allowed [defendant] Leon to testify at trial about the $2.4 billion Goldman Sachs valuation and in excluding that testimony from the sufficiency analysis. What Mr. Leon did, in response to questions by Taxinet’s counsel, was repeat the valuation provided by Goldman Sachs in a report that the district court had excluded on hearsay grounds.”
And even though the defendant himself testified to the same valuation, which might have made it a Fed. R. Evid. 801(d)(2) party admission excluded from the hearsay rule, the panel holds that the number is purely speculative as a basis for damages. “Here there was no connection between the $2.4 billion valuation and the benefit conferred on Mr. Leon by Taxinet in 2015.” It did not represent the value of any benefit supposedly conferred on the defendant.
Yet having affirmed the judgment as a matter of law, the panel—exercising its discretion to consider a new trial as an alternative to dismissal—sends the case back for a trial on damages only.
“First, Taxinet introduced sufficient evidence from which a jury could have found that it conferred a benefit on Mr. Leon, that he accepted the benefit, and that it would be inequitable to allow him to retain the benefit without paying for it. Second, Taxinet presented evidence which, though insufficient to sustain the $300 million award, could form the foundation for some award of damages for Mr. Leon’s unjust enrichment. Third, the district court admitted Taxinet’s hearsay evidence on valuation during the trial and changed its mind about admissibility only after the jury rendered its verdict. Taxinet, it seems to us, understandably relied on the evidence admitted at trial, and could have asked for damages (albeit a reduced sum) under a different theory had the court ruled during trial that the challenged valuation evidence was inadmissible.”
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