Toyo Tire Corporation will appeal a federal judge's decision to void most of a $110 million jury award given to Toyo during Toyo's longstanding legal battle against rival tire maker, Atturo.
Attorneys for Toyo filed a notice of appeal on May 13 in Chicago federal court. The company said it will appeal a host of rulings from the case.
Most notably, however, Toyo will appeal a May 10 ruling from U.S. District Judge Mary Rowland, in which the judge erased nearly all of the punitive damages a jury had ordered Atturo to pay Toyo for allegedly infringing on Toyo's Open Country Mountain trade dress.
Rowland's most recent ruling centered on posttrial motions in the lawsuit, which has continued since January 2014.
Atturo filed seven counterclaims in the case, basing its claims on Toyo’s 2013 complaint to the U.S. International Trade Commission concerning Atturo’s Trail Blade tires. Toyo initially moved for summary judgment on Atturo’s counterclaims in 2016; those counterclaims were the only aspects remaining when the case finally reached a jury in September 2021.
The six-day trial resulted in $10 million in compensatory damages to Atturo and $100 million in punitive damages. Post-trial motions concerned Atturo’s allegations of interference with contract and prospective business, defamation, unfair competition, unjust enrichment and violation of the Illinois Deceptive Trade Practices Act. Toyo argued it deserved judgment in its favor because it should’ve been immune from Atturo’s claims.
Rowland agreed judgement was proper on the defamation and IDTPA allegations, saying the state’s absolute litigation privilege bars certain claims stemming from statements contained in ITC settlement agreements. While the challenged statements were defamatory, Rowland explained, state law allows such language in that context, and Atturo didn’t allege Toyo committed defamation outside the ITC proceedings. She explained the same privilege applies to statements alleging deceptive trade practices.
However, Rowland continued, that privilege didn’t bar Atturo’s four other claims. She said state courts have cautioned the privilege to be immune from liability for certain statements is “necessarily narrow” specifically because the privilege is absolute.
“Indeed this is not a case in which these other claims merely recast the defamation claim,” Rowland wrote. “The tortious interference, unfair competition and unjust enrichment claims are not directed only at the allegedly defamatory statements Toyo made; they are based on Toyo’s conduct as it relates to Atturo’s customer Dunlap & Kyle and Toyo’s requirement that it never sell, import or manufacture the Atturo tire.”
Toyo also argued the Noerr-Pennington doctrine offers immunity. Quoting from a 2011 U.S. Seventh Circuit Court of Appeals opinion in Mercatus Group v. Lake Forest Hospital, Rowland said the doctrine “extends absolute immunity under the antitrust laws to businesses and other associations when they join together to petition legislative bodies, administrative agencies or courts for action that may have anticompetitive effects.”
Rowland said U.S. District Judge John Z. Lee, in an earlier opinion, correctly determined the business restraints Atturo alleged specifically arose from Toyo’s private action and not its ITC litigation. She also said she couldn’t “find that Toyo’s belief in its intellectual property justified its interference with Atturo’s business.”
Toyo likewise failed to convince Rowland the public interest in promoting ITC settlements should entitle it to dismissal of Atturo’s counterclaims.
Turning to Toyo’s argument it deserved judgment as a matter of law, Rowland agreed to overturn the jury’s finding it interfered with Atturo’s contract because the challenged agreements could be terminated at will. However, she said the jury had legally sufficient evidence to side with Atturo on its claim of interference with prospective business, noting Atturo’s trial evidence that at one point D&K intended for Atturo’s Trail Blade tire to be a core product and that Toyo’s actions dampened that outlook.
Rowland further said the jury had reason to side with Atturo on its unfair competition and unjust enrichment claims, noting “Toyo conditioned the settlement of unrelated patent claims on agreements by other companies in the tire industry to permanently cease and desist from selling the Atturo Trail Blade.”
The $10 million compensatory damages award can remain, Rowland explained, rejecting Toyo’s request to strike an expert opinion claiming Atturo lost $11.5 million when its deal with D&K fell through.
“For punitive damages, however, other considerations come into play,” Rowland wrote, adding a punitive award is appropriate only when a party’s conduct rises to a level of bad enough to warrant punishment or deterrence.
“The jury found that Toyo’s conduct was wrongful, deceptive and violated principles of commercial morality, justice, equity and good conscience,” Rowland wrote. “On the other hand, considering the trial record as a whole, the court does not find the punitive damages award to be warranted.”
Rowland reduced the punitive penalty to $100,000 and denied Toyo’s motion for a new trial. She rejected Toyo’s arguments concerning jury instructions and said there was no miscarriage of justice. She denied Atturo’s motion for an injunction barring Toyo from further disparagement, saying that request arose only through the IDTPA claims, under which she’d already granted judgment in Toyo’s favor.
Atturo has been represented in the case by attorneys Brian C. Bianco, Julia R. Lissner and John M. Schafer, of the firm of Akerman LLP, of Chicago.
Toyo has been represented by attorneys Matthew B. Lowrie, John W. Custer and Kimberly K. Dodd, of the firm of Foley & Lardner, of Boston and Chicago, and Mark T. Deming, of Polsinelli P.C., of Chicago.