The Franchise Memorandum

The United States Court of Appeals for the Ninth Circuit has amended a recent opinion and voted to deny rehearing en banc in Alaska Rent-A-Car, Inc. v. Avis Budget Group, Inc., 2013 U.S. App. LEXIS 12709 (9th Cir. June 19, 2013). We previously reported on the case in Issue 165 of The GPMemorandum. In its most recent opinion, the court of appeals upheld the plaintiff licensee’s $16 million jury verdict for lost profits and lost future profits stemming from Avis’s purchase of Budget Rent-A-Car out of bankruptcy. Alaska Rent-A-Car successfully argued that Avis’s ownership and operation of Budget violated a settlement agreement regarding its exclusive territory and reduced the profits it could have expected without the competition from Budget. On appeal, Avis challenged the damages award based on the method with which Alaska Rent-A-Car’s expert calculated lost profits and the degree of certainty to which Alaska Rent-A-Car proved those damages. Avis also challenged the award of attorneys’ fees, which were assessed because the common law in Alaska always permits the prevailing party to recover a portion of its attorneys’ fees from the other party, regardless of whether it was provided for by contract or statute.

The Ninth Circuit rejected the challenges to the award, noting that Avis’s arguments about the method used to calculate lost profits and the certainty with which they were proved went only to the weight and credibility of the evidence, not to its admissibility. The appellate court had to view the evidence in a light most favorable to the jury’s verdict, and the Ninth Circuit concluded that Avis had failed to demonstrate that the only reasonable conclusion was contrary to that of the jury. The court also ruled that, although Alaska’s rule on attorneys’ fees was unique, it still applied to a diversity action brought in Alaska even though the substantive law of another state governed the parties’ relationship. The Ninth Circuit affirmed the verdict in its entirety; however, it remanded the case in order to reduce the amount of prejudgment interest, which both parties agreed had been calculated in error.