WARMAN v. LOCAL YOKELS FUDGE, LLC

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA CHRISTOPHER M. WARMAN, et al., ) ) Plaintiffs, ) Civil Action 19-1224 ) vs. ) Magistrate Judge Patricia L. Dodge ) LOCAL YOKELS FUDGE, LLC, et al., ) ) Defendants.

MEMORANDUM OPINION Plaintiffs Christopher M. Warman (“Warman”), the Trust for Family of Christopher Warman (the “Trust”) and Chocolate Moonshine, LLC (“Moonshine LLC”) brought this action against Defendants Local Yokels Fudge, LLC (“Local Yokels”), Christine Falvo (“Falvo”), Charles Brian Griffin (“Griffin”), Donald Konieczny (“Konieczny”) and CM Chocolatier, LLC (“Chocolatier”). The Amended Complaint asserts various federal and related state-law claims arising out of Defendants’ alleged use of Plaintiffs’ recipe for making fudge, which Plaintiffs claimed to be a trade secret. A jury trial resulted in a verdict for Plaintiffs, as described below.

Defendants have filed a Motion for a New Trial (ECF No. 442). For the reasons below, their motion will be denied.

I. Relevant Background Plaintiffs commenced this action in September 2019 and filed an Amended Complaint on August 27, 2020 (ECF No. 51). On December 27, 2022, Defendants’ motion for summary judgment was granted with respect to Plaintiffs’ trademark and copyright infringement claims and denied in all other respects (ECF Nos. 159, 160).

Prior to the commencement of the jury trial, Defendants filed a motion in limine (ECF No. 262) related to a Final Equitable Distribution Order of Court by Consent issued on October 16, 2019 by the Court of Common Pleas of Allegheny County (“Consent Order”). Plaintiffs filed a response in opposition to the motion in limine on November 24, 2023 (ECF No. 268).

The Consent Order terminated the marriage between Plaintiff Warman and Defendant Falvo. The nine-page order addresses and resolves a number of matters between them. In one such matter, and as part of the equitable distribution of assets, Falvo agreed that “without admitting that there is a protectable trade secret or that she has a claim to any such secret, [she] waives any claim she may have to Husband’s pre-marital fudge recipe and any increase in value thereof.” (ECF No. Ex. 1 § I(C).)

Defendants argued in their motion in limine that Plaintiff should be prohibited “from asserting at trial the Final Equitable Distribution Order for any purpose, including for the purpose of challenging Defendant Christine Falvo’s ownership of the alleged trade secret recipe.” (ECF No. 262 at 5.) Among other things,1 Defendants contended that the Consent Order was unenforceable because Warman had failed to fulfill his obligation to purchase a life insurance policy naming Falvo as the primary beneficiary. (ECF No. 464 Ex. 1 § I(B)(2).)

During a conference just before the trial began on November 27, 2023, the Court stated that it was denying the motion in limine because, among other things, the Consent Order was “an Order of Court, not an agreement, and, therefore, if there was any claim breached, the proper remedy would be to file a motion for sanctions, a motion to enforce or some other document in the

They also identified the Consent Order as a trial exhibit in their Pretrial Statement. (ECF No. 190- Ex. 172.)

Family Division.” (ECF No. 352 at 8.) See also id. at 12 (“It’s an Order of Court, correct, and the remedy for an Order of Court, whether it’s a Consent Order or not is to go back to the Court to enforce.”). The order denying the motion in limine was noted on the record the next day. See ECF No. 272 (text order “denying 262 Motion in Limine for an order prohibiting Plaintiffs from asserting at trial that Defendant Falvo has waived any claim to the alleged trade secret recipe for the reasons stated on the record.”)

Later in the same conference, Defendants’ counsel asked whether he would be permitted to raise the fact that Warman did not purchase the life insurance policy, and the Court stated that: “Raising the issue on the failure to procure a life insurance policy since it was the subject of court proceedings, you are not permitted to raise.” (ECF No. 352 at 19.) At the same time, the Court stated that if Falvo “wants to try and explain why she thinks she has the right to use the trade secret, she can.” (Id. at 21.) Falvo did, in fact, testify during the trial.

Defendants note that, in his closing argument, Plaintiffs’ counsel referred to the waiver provision, stating that: “We all know that in 2019 as part of the divorce proceeding, Ms. Falvo relinquished any right that she had in the trade secret recipe. . . . It’s a document signed by Ms. Falvo as a consent order issued by the Court. She expressly waived any right to the trade secret.” (ECF No. 464 Ex. 5 at 27-28.)

At the conclusion of the trial, the jury rendered a verdict and awarded damages in favor of Plaintiffs and against Falvo, Konieczny, and Local Yokels with respect to the trade secret misappropriation claims and against Chocolatier on the unjust enrichment claim. (ECF No. 288).

Defendants filed the pending motion on December 27, 2024 (ECF No. 442), and it has been fully briefed (ECF Nos. 443, 464, 472).2 II. Standard of Review Under Rule 59(a)(1)(A), after a jury trial, the court may grant a new trial on all or some issues as to any party. Rule 61 further provides that: Unless justice requires otherwise, no error in admitting or excluding evidence--or any other error by the court or a party--is ground for granting a new trial, for setting aside a verdict, or for vacating, modifying, or otherwise disturbing a judgment or order. At every stage of the proceeding, the court must disregard all errors and defects that do not affect any party’s substantial rights.

Fed. R. Civ. P. 61.

Thus, in resolving a motion for a new trial based on an evidentiary ruling “a District Court must first determine whether an error was made during the course of the trial, and then determine ‘whether that error was so prejudicial that refusal to grant a new trial would be “inconsistent with substantial justice.”’” Bogaski v. County of Allegheny, Pa., 2018 WL 1471977, at *1 (W.D. Pa. Mar. 26, 2018) (quoting Bhaya v. Westinghouse Elec. Corp., 709 F. Supp. 600, 601 (E.D. Pa. 1989), aff’d, 922 F.2d 184 (3d Cir. 1990)).

A new trial is an extraordinary form of relief. See Advanced Fluid Sys., Inc. v. Huber, 958 F.3d 168, 181 (3d Cir. 2020). As the Court of Appeals has stated, “the district court’s latitude on a new trial motion is broad when the reason for interfering with the jury verdict is a ruling on a matter that initially rested within the discretion of the court, e.g. evidentiary rulings. . . .” Klein v. Hollings, 992 F.2d 1285, 1289-90 (3d Cir. 1993). (citation omitted).

Fed. R. Civ. P. 59(b).

III. Discussion Defendants contend that the Court’s ruling that the Consent Order was not a contract represents reversible error. They maintain that the Consent Order was, in fact, a contract and as a result, they should have been permitted to present evidence that Warman materially breached one of its terms.

The Court acknowledges that Defendants’ position that the Consent Order is a contract is correct, see Commonwealth by Shapiro v. UPMC, 647 Pa. 198, 214, 188 A.3d 1122, 1131 (2018) (“A consent decree is a judicially sanctioned contract that is interpreted in accordance with the principles governing all contracts.”) Regardless, the Court did not err by denying Defendants’ motion.

As Defendants assert in their motion for a new trial, their intent was to obtain a decision that the Consent Order is unenforceable.3 Notably, however, Plaintiffs did not seek to enforce the Consent Order at the trial.4 Indeed, had this been their intent, they could have moved to preclude Falvo from testifying that she had any claim to the trade secret recipe, but they did not (or to the extent that they did, this request was denied). See ECF No. 352 at 14-15 (at the conference, the Court informed Plaintiffs’ counsel that “I’m going to allow you to impeach her . . . if you choose

The Consent Order does not provide that these two specific terms are intertwined or related, and there is nothing in the Consent Order that states, let alone implies, that a breach by Warman relieves Falvo of this specific obligation while at the same time preserving all other terms in the nine-page Consent Order. As provided in the Consent Order, in the event of a breach, the non- breaching party may sue to enforce its terms.

Defendants have failed to justify why they would be entitled to a trial within a trial under these circumstances. Nor have they addressed the potential prejudice to Plaintiffs if the jury were asked to determine the enforceability of the Consent Order in the absence of a breach of contract claim or any prior notice that Defendants intended to seek to void the Consent Order.

Defendants have failed to demonstrate that the Court committed an error when it denied their motion in limine on the merits. Whether Falvo waived any claim to the fudge recipe or had a right to use it is highly relevant in connection with Plaintiffs’ trade secret misappropriation claim.

By marked contrast, whether Warman purchased an insurance policy for the benefit of Falvo or indeed, whether both parties complied with their respective obligations under the Consent Order, has no bearing on any of the issues here. Therefore, while the Court acknowledges its error in misconstruing the nature of the Consent Order, it is not grounds for granting a new trial and did

Even if allowing Plaintiffs to reference the waiver provision while barring Defendants from introducing evidence about Warman’s failure to purchase an insurance policy represented error, however, Defendants have failed to show that it represented prejudicial error. In fact, it would be harmless error. Falvo had a full and unfettered opportunity to testify at trial about why she believed she had a right to the fudge recipe she used in her business. Moreover, Defendants contended at trial and presented evidence for the jury’s consideration both that Plaintiffs’ recipe was not a trade secret and that they were not using the same recipe. See, e.g., ECF 290, Ex. 20 (Recipe Comparison between Trade Secret Recipe and Local Yokels Recipe).

Unlike Warman’s alleged failure to buy an insurance policy, Falvo’s waiver of any claim to Warman’s “pre-marital fudge recipe” was directly relevant to, while not dispositive of, Plaintiffs’ claim that Falvo and others misappropriated Plaintiffs’ trade secret recipe. And because the Consent Order was in full force and effect at the time of trial, Plaintiffs had a right to reference relevant portions of it.

Defendants argue that if evidence had been admitted that Warman failed to buy an insurance policy had been admitted, “the jury could have found that Warman breached his obligations under the Consent Order, materially breached that contract, and relieved Falvo of her obligations (including a purported waiver of the recipe), which very well could have resulted in a completely different verdict in this case.” (ECF No. 472 at 5.) Even if one could accept Defendants’ unsupported premise that it would have been appropriate to litigate the enforceability of the Consent Order at trial, Defendants offer only rank speculation about the possibility of a different outcome. To grant a new trial based only on such speculation is “inconsistent with substantial justice.”

“A new trial is extraordinary relief which should be granted only where extraordinary justifying circumstances are present.” Kengerski v. County of Allegheny, 2022 WL 17668800, at *1 (W.D. Pa. Dec. 14, 2022) (quoting Bistrian v. Levi, 517 F. Supp. 3d 335, 345 (E.D. Pa. 2021)).

Defendants have failed to show that they are entitled to such relief.

IV. Conclusion For all these reasons, Defendants’ Motion for a New Trial (ECF No. 442) will be denied.

An appropriate order will follow.

April 22, 2025 BY THE COURT: s/Patricia L. Dodge PATRICIA L. DODGE UNITED STATES MAGISTRATE JUDGE