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Learning Annex Holdings, LLC v. Rich Global

July 13, 2012

LEARNING ANNEX HOLDINGS, LLC, LEARNING ANNEX, LLC, AND LEARNING ANNEX, L.P., PLAINTIFFS,
v.
RICH GLOBAL, LLC, DEFENDANT.



The opinion of the court was delivered by: Shira A. Scheinlin, U.S.D.J.

OPINION AND ORDER

I. INTRODUCTION*fn1

Learning Annex Holdings, LLC, Learning Annex, LLC, and Learning Annex, L.P. (collectively, "Learning Annex" or "LA") bring this action against Rich Global, LLC ("Rich Global") following the collapse of their business relationship. This relationship began in 2001 when Robert Kiyosaki -- now the owner, along with Kim Kiyosaki, of the Rich Global entities -- became a featured speaker at Learning Annex expositions.*fn2 In the hopes of expanding their relationship, Learning Annex and Rich Dad entered into a Memorandum of Understanding ("MOU") on September 7, 2005, in which the parties agreed to "develop and conduct the free seminar business with follow up fee based courses."*fn3

The MOU stated that it was not intended to be binding on the parties.*fn4 Shortly thereafter on September 15, 2005, Sharon Lechter, then a member of Rich Global's management team, sent an email to William Zanker, the principal owner and President of Learning Annex, authorizing Learning Annex "to develop and conduct free Rich Dad seminars with follow up courses in the United States and Canada."*fn5

Ultimately, Rich Global broke off the relationship on February 2, 2006 by means of an email from Lechter to Zanker.*fn6 On July 18, 2006, Rich Global entered into formal agreements to form a business relationship with Whitney Education Group, Inc. (collectively with related entities, "Whitney") to pursue the free seminar business.*fn7 From 2007 to 2010, this free seminar business brought in total cash sales of $437.8 million, of which Rich Global received nearly $45 million in royalties.*fn8

On July 13, 2011, a jury awarded plaintiffs approximately $14.6 million in damages on a quantum meruit claim for uncompensated "services related to the development of the free seminar business."*fn9 On January 11, 2012, I granted Rich Global a new trial on damages.*fn10 On April 24, 2012 a re-trial on damages began, and the jury rendered a verdict for $15,863,696 on April 30, 2012.*fn11 Rich Global now moves, again, for judgment as a matter of law or, in the alternative, for a new trial.

II. LEGAL STANDARD

A court may render judgment as a matter of law when "a party has been fully heard on an issue during a jury trial and the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue."*fn12 The standard for granting judgment as a matter of law "mirrors" the standard for granting summary judgment.*fn13 Accordingly, in ruling on such a motion, the trial court is required to consider the evidence in the light most favorable to the party against whom the motion was made and to give that party the benefit of all reasonable inferences that the jury might have drawn in his favor from the evidence. The court cannot assess the weight of conflicting evidence, pass on the credibility of the witnesses, or substitute its judgment for that of the jury.*fn14

A jury verdict cannot be set aside lightly. A court may not grant judgment as a matter of law unless (1) there is such a "'complete absence of evidence supporting the verdict that the jury's findings could only have been the result of sheer surmise and conjecture'" or (2) there is "'such an overwhelming amount of evidence in favor of the movant that reasonable and fair minded [persons] could not arrive at a verdict against [it].'"*fn15

A "court may, on motion, grant a new trial on all or some of the issues . . . after a jury trial, for any reason for which a new trial has heretofore been granted in an action at law in federal court."*fn16 The legal test for granting a new trial is less stringent than for granting judgment as a matter of law. "Unlike a motion for judgment as a matter of law, a motion for a new trial may be granted even if there is substantial evidence to support the jury's verdict."*fn17 Nevertheless, in practice courts do not grant new trials as freely as the language suggests. "'A motion for a new trial ordinarily should not be granted unless the trial court is convinced that the jury has reached a seriously erroneous result or that the verdict is a miscarriage of justice.'"*fn18

Under Federal Rule of Civil Procedure 50(b), "[n]o later than 28 days after the entry of judgment . . . the movant may file a renewed judgment as a matter of law and may include an alternative or joint request for a new trial under Rule 59." "In ruling on the renewed motion, the court may: (1) allow judgment on the verdict, if the jury returned a verdict; (2) order a new trial; or (3) direct entry of judgment as a matter of law."

III. DISCUSSION

A. Statute of Frauds

1. Existence of Written Evidence

Rich Global renews its argument that no written evidence establishes an agreement by Rich Global to compensate Learning Annex for the services it provided. This issue was raised in connection with the first trial, and I considered it in the Rule 50(a) Opinion. In that opinion, I ruled that a reasonable jury could find a written agreement, sufficient to satisfy the statute of frauds, supporting Learning Annex's quantum meruit claim.*fn19 In particular, I relied on the following exhibits from the first trial:

* Plaintiffs' Exhibit 60 -- a September 15, 2005 letter from Sharon Lechter expressly authorized Learning Annex "to develop and conduct free Rich Dad seminars with ...


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