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Horizon Health Corp. v. Acadia Healthcare Co., Inc.

Supreme Court of Texas

May 26, 2017

Horizon Health Corporation, Petitioner/Cross-Respondent
v.
Acadia Healthcare Company, Inc.; Psychiatric Resource Partners, Inc.; Michael A. Saul; Timothy J. Palus; Peter D. Ulasewicz; Barbara H. Bayma; and John M. Piechocki, Respondents/Cross-Petitioners

          Argued March 1, 2017

         On Petition for Review from the Court of Appeals for the Second District of Texas

          OPINION

          Paul W. Green Justice

         In this case, we must determine whether the court of appeals erred in concluding that the evidence of the petitioner's future lost profits was legally insufficient to support the jury's award and whether the exemplary damages award is unconstitutionally excessive despite the court of appeals' suggested remittitur. We agree that the evidence is legally insufficient to support any award of future lost profits, but we conclude that the court of appeals' remitted exemplary damages award is unconstitutionally excessive. We also agree with the court of appeals that the entity defendants cannot be held jointly and severally liable for the exemplary damages awarded against the individual defendants, that it is proper to remand the issue of attorney's fees given the insufficient evidence supporting any award of future lost profits, and that the trial court did not err in imposing discovery sanctions against one of the individual defendants. Accordingly, we reverse the judgment of the court of appeals in part and remand the case to that court so that it may reconsider its suggested remittitur of exemplary damages in light of our decision.

         I. Background

         Horizon Health Corporation provides contract management services to hospitals and healthcare providers to manage their psychiatric and behavioral health programs. Originally formed in 1981, Horizon was acquired by Psychiatric Solutions, Inc. (PSI) in 2007. In 2010, members of Horizon's upper-management team, who called themselves "Project Shamrock, " attempted to purchase Horizon from PSI after learning that PSI was considering converting from a publicly traded company into a private entity.[1] However, PSI was ultimately acquired by Universal Health Services (UHS), a large publicly traded company. The members of Project Shamrock attempted to purchase Horizon from UHS, but UHS rejected the proposal in late 2010.

         Subsequently, PSI's chief executive officer, Joey Jacobs, left PSI and became chief executive officer of Acadia Healthcare Company, which owns "freestanding psychiatric, child and adolescent, residential, chemical dependency treatment" facilities. In May 2011, Horizon's president, Michael Saul, approached Acadia about joining Acadia's team and presented a business plan to Acadia's president, Brent Turner, proposing that Acadia establish a subsidiary to manage mental-health programs for hospitals and other mental-health providers. In his presentation, Saul identified several companies that would be "competition" for the proposed subsidiary, including Horizon, which Saul indicated was "lost in UHS bureaucracy" and would lose customers "due to relationships." Acadia agreed to the proposal, and Saul sent Turner his résumé and the résumés of other members of Horizon's management who had been part of Project Shamrock (Peter Ulasewicz, Tim Palus, and Barbara Bayma) as a "proposed management team." Saul also told Turner that they "would go hard" after John Piechocki, a member of Ulasewicz's sales team, based on his successful sales record at Horizon, and Saul and Ulasewicz began to recruit Piechocki shortly thereafter.

         A. Management Lift-Out and Direct Competition with Horizon

         On two separate occasions in June 2011, Saul, Ulasewicz, Palus, and Bayma met to discuss their anticipated move to Acadia and their plans for the Acadia subsidiary. In August and September 2011, Saul, Ulasewicz, Bayma, Palus, and Piechocki resigned from Horizon and joined Acadia's recently formed subsidiary based on Saul's proposal, Psychiatric Resource Partners (PRP).

         After losing multiple members of its upper-management team in a two-month period, Horizon conducted a forensic investigation of its computer system. Horizon discovered that Saul, Ulasewicz, Bayma, and Palus had coordinated their departures from Horizon to join the newly formed Acadia subsidiary. Horizon also learned that some of the Horizon defectors had made copies of several Horizon documents preceding their move to PRP. For example, Saul purchased an external hard drive in late 2010 and, after having Horizon's internal encryption system disabled, copied what Jack DeVaney, Horizon's president, described as "a massive, massive amount" of Horizon documents on it, such as policies and procedures, "non-standard" contract language, financial models, monthly account listings, sales presentations, orientation materials, and legal files.

         Similarly, Piechocki copied Horizon contracts, financial models, and lists of Horizon's sales leads, marking some of the leads "DEAD" before resigning from his position at Horizon and adding those leads to PRP's "master contact list" after joining PRP.

         In September 2011, Horizon notified Saul, Ulasewicz, Bayma, Palus, and Piechocki that their resignations and subsequent employment with Acadia were in violation of their employment agreements, the restrictive covenants entered into "at the inception of [their] employment, " and of their common-law duties of good faith and loyalty.[2] Horizon demanded that they end their employment with Acadia and return all documents to Horizon.

         Upon their resignations from Horizon, and after receiving Horizon's notice, the new members of PRP began competing with Horizon, soliciting business from Horizon's prospective and existing client base-though it is undisputed that Horizon did not lose any existing customers to PRP. For example, Piechocki secured a consulting contract for PRP with Southwest Regional Medical Center, which was an active Horizon sales lead that Piechocki had emailed to his personal email address before his departure. In January 2012, Piechocki signed Westlake Regional Hospital (Westlake) to a contract with PRP in "direct competition" with Horizon, using Horizon's financial models to "crunch[] numbers" to win the contract. Similarly, Ulasewicz scheduled a meeting with Cottage Hospital, a potential client with which he had met while employed by Horizon. Ulasewicz had learned while working at Horizon that Cottage Hospital's barrier to using contract-management services might be removed; however, Ulasewicz did not share this information with anyone at Horizon.

         B. Procedural History

         In October 2011, Horizon filed suit against Saul, Ulasewicz, Bayma, Palus, and Piechocki (the individual defendants) for breach of fiduciary duty, misappropriation of trade secrets, conversion, liability under the Harmful Access by Computer Act, liability under the Theft Liability Act, tortious interference with existing contracts, tortious interference with prospective business relationships, and conspiracy. Horizon also brought claims against Saul, Palus, Ulasewicz, and Bayma for breach of the restrictive covenants not to compete, fraud, and breach of contract. Horizon alleged that Acadia and PRP (the entity defendants) were liable for essentially all of these acts and omissions either because they were directly involved or under the doctrines of ratification and vicarious liability and because they aided and abetted the individual defendants in committing the underlying misconduct.

         At the ensuing trial, the jury entered a unanimous verdict in Horizon's favor on many of its claims. The jury found that Saul, Ulasewicz, Bayma, and Palus breached the terms of their non-compete agreements (NCAs); Saul and Ulasewicz breached the terms of their covenants not to solicit with respect to their efforts to ensure Piechocki's move to PRP; and all of the individual defendants failed to comply with their fiduciary duties to Horizon. Furthermore, the jury found that Acadia and PRP ratified this conduct and will earn future profits as a result. Additionally, the jury found that the individual defendants, while acting in the scope of their employment with Acadia and PRP, intentionally interfered with the NCAs; misappropriated Horizon's trade secrets; converted

          Horizon's proprietary information; intentionally committed theft of Horizon's property and trade secrets; and knowingly accessed Horizon's computers, computer network, or computer system without consent and with intent to harm Horizon. The jury also found that Acadia and PRP ratified this conduct. The jury further found that Saul, Ulasewicz, Bayma, and Palus committed fraud and fraud by nondisclosure by submitting expense reports for trips taken in June 2011. Moreover, the jury found that all of the defendants participated in a conspiracy that damaged Horizon and that Acadia and PRP intentionally aided and abetted the individual defendants in breaching some of their fiduciary duties, intentionally interfering with the NCAs, misappropriating trade secrets, and converting Horizon's proprietary information, but only PRP aided and abetted the theft of Horizon's property or trade secrets and the harmful computer access. Finally, the jury found that the damage sustained by Horizon as a result of the individual defendants' breach of fiduciary duties, intentional interference with the NCAs, misappropriation of trade secrets, conversion of Horizon's proprietary information, and theft was attributable to the malice of the individual defendants, as well as the entity defendants, Acadia and PRP.

         The jury awarded Horizon $898, 000 in future lost profits from the Westlake contract based on Saul's, Palus's, Ulasewicz's, and Bayma's failure to comply with their covenants not to compete and $3, 300, 000 in future lost profits based on Saul's and Ulasewicz's failures to comply with their covenants not to solicit-constituting Horizon's lost sales from Piechocki's future sales production.[3]The jury also awarded Horizon $50, 000 as the fair market value of the stolen property or trade secrets that were the subject of Horizon's claim for theft of property or trade secrets; $5, 049.24 for the travel expenses charged to Horizon by Ulasewicz, Palus, and Bayma that were not associated with Horizon's business; $1, 750, 000 in exemplary damages; and $900, 000 in attorney's fees for representation costs incurred through the conclusion of trial. In total, the jury awarded Horizon $6, 903, 049.24. The trial court rendered final judgment in July 2013, awarding Horizon the full amount of damages found by the jury, as well as $41, 740 in sanctions against Saul based on the trial court's pretrial discovery-abuse ruling. The trial court, however, reduced Horizon's trial attorney's fee award from $900, 000 to $769, 432, disregarded the jury's zero award of appellate attorney's fees, and awarded Horizon $97, 500 for appellate attorney's fees. Acadia appealed, presenting multiple issues for review, and Horizon cross-appealed on the limited issue of the trial court's reduction in the attorney's fees award.

         The court of appeals reversed the trial court's judgment and rendered a take-nothing judgment in part and remanded in part. 472 S.W.3d 74, 105-06 (Tex. App.-Fort Worth 2015, pet. granted). The court of appeals held that Horizon was not entitled to any award of future lost profits damages because its expert testimony was impermissibly speculative and legally insufficient. Id. at 89-91. Thus, the court of appeals rendered a take-nothing judgment against Horizon on all of its contractual and tort claims, except for theft of property and trade secrets ($50, 000 jointly and severally) and fraudulent expense reports ($5, 049.24 jointly and severally). Id. at 92-93. Because only $55, 049.24 in compensatory damages remained, the court of appeals held that the jury's $1, 750, 000 exemplary damages award was unconstitutionally excessive and remanded for a new trial on Horizon's attorney's fees. Id. at 104. In its initial decision, the court of appeals suggested a remittitur of the exemplary damages award to a total amount of $220, 196.96, to be apportioned among the individual defendants in the same proportions awarded by the jury. Id. at 98. On rehearing, however, the court of appeals increased its suggested remittitur to $220, 196.96 for each individual defendant, totaling $1, 100, 984.80. Id. at 99 & n.31. The court of appeals also reversed the trial court's judgment holding Acadia and PRP jointly and severally liable for the exemplary damages assessed against the individual defendants. Id. at 101-02. Finally, the court of appeals affirmed the trial court's award of discovery sanctions against Saul. Id. at 105.

         Both sides filed petitions for review raising a number of issues. The issues include whether (1) the court of appeals erred in holding that the evidence of future lost profits is legally insufficient; (2) an exemplary damages award is proper in this case and whether the court of appeals' suggested remittitur of exemplary damages violates the Due Process Clause of the Fourteenth Amendment; and (3) the court of appeals erred in reversing the joint-and-several exemplary damages awards against Acadia and PRP.

         II. Sufficiency of the Evidence of Future Lost Profits

         Horizon argues that the court of appeals erred by holding that the evidence is legally insufficient to support the jury's award of $4, 198, 000 for future lost profits.[4] We disagree.

         A. Standard of Review

         The court of appeals properly stated the law regarding legal-sufficiency review of a jury's finding: "In a legal-sufficiency review, we determine whether more than a scintilla of evidence supports the jury's finding by considering evidence favorable to the finding if a reasonable fact-finder could and disregarding evidence contrary to the finding unless a reasonable fact-finder could not." Id. at 87 (citing Cent. Ready Mix Concrete Co. v. Islas, 228 S.W.3d 649, 651 (Tex. 2007); Cont'l Coffee Prods. Co. v. Cazarez, 937 S.W.2d 444, 450 (Tex. 1996)). The evidence supporting a jury's finding is legally insufficient if: (1) there is a complete absence of evidence of a vital fact; (2) the rules of law or of evidence bar a court from giving weight to the only evidence presented to prove a vital fact; (3) there is no more than a mere scintilla of evidence presented to prove a vital fact; or (4) the evidence offered conclusively establishes the opposite of a vital fact. Sw. Energy Prod. Co. v. Berry-Helfand, 491 S.W.3d 699, 713 (Tex. 2016) (citing City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005)). In conducting a legal-sufficiency review, the court is "'limited to reviewing only the evidence tending to support the jury's verdict and must disregard all evidence to the contrary, ' except contrary evidence that is conclusive." Id. (quoting Mancorp, Inc. v. Culpepper, 802 S.W.2d 226, 227 (Tex. 1990), and citing City of Keller, 168 S.W.3d at 817).

         B. Applicable Law

         As we have explained, the rules concerning the sufficiency of evidence of lost profits damages are well established:

Recovery for lost profits does not require that the loss be susceptible of exact calculation. However, the injured party must do more than show that [it] suffered some lost profits. The amount of the loss must be shown by competent evidence with reasonable certainty. What constitutes reasonably certain evidence of lost profits is a fact intensive determination. As a minimum, opinions or estimates of lost profits must be based on objective facts, figures, or data from which the amount of lost profits can be ascertained. Although supporting documentation may affect the weight of the evidence, it is not necessary to produce in court the documents supporting the opinions or estimates.

ERI Consulting Eng'rs, Inc. v. Swinnea, 318 S.W.3d 867, 876 (Tex. 2010) (quoting Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex.1992)). Thus, lost profits damages can be recovered only when both the fact and amount of damages is proved with reasonable certainty. See, e.g., Heine, 835 S.W.2d at 85. A party's bare assertion that a contract was lost does not establish lost profits with reasonable certainty. Id. Rather, the general rule is that recovery of lost profits as damages is allowed "where it is shown that a loss of profits is the natural and probable consequence of the act or omission complained of, and their amount is shown with sufficient certainty." Tex. Instruments, Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 279 (Tex. 1994) (quoting Sw. Battery Corp. v. Owen, 115 S.W.2d 1097, 1098 (Tex. 1938)). However, "anticipated profits cannot be recovered where they are dependent upon uncertain and changing conditions, such as market fluctuations, or the chances of business, or where there is no evidence from which they may be intelligently estimated." Id. (quoting Owen, 115 S.W.2d at 1098). Indeed, "[t]he law is wisely skeptical of claims of lost profits from untested ventures or in unpredictable circumstances, which in reality are little more than wishful thinking." Phillips v. Carlton Energy Grp., LLC, 475 S.W.3d 265, 280 (Tex. 2015). Although legally sufficient evidence might otherwise establish a breach of contract or tort permitting an award of lost profits, "profits 'not susceptible of being established by proof to that degree of certainty which the law demands' cannot be recovered as damages." Id. at 279 (quoting Owen, 115 S.W.2d at 1099). When the evidence supporting a claim for lost profits damages is largely speculative or a mere hope for success, lost profits have not been established with reasonable certainty. Tex. Instruments, 877 S.W.2d at 279.

         With these rules in mind, we now consider whether legally sufficient evidence establishes the fact and amount of Horizon's lost profits damages with reasonable certainty.

         C. Analysis

         As a preliminary matter, we need not distinguish between Horizon's causes of action supporting the award of lost profits damages because these damages are recoverable for any one of those claims. Swinnea, 318 S.W.3d at 877 n.3 (citing Waite Hill Servs., Inc. v. World Class Metal Works, Inc., 959 S.W.2d 182, 184-85 (Tex.1998) (per curiam)). However, because Horizon presented two different bases supporting the award of lost profits damages-the loss of the Westlake contract and the loss of Piechocki's future contract acquisitions-we must consider whether Horizon established the fact and amount of its lost profits arising from each basis independently.

         1. Westlake Contract

         The jury awarded Horizon $898, 000 in damages for lost profits based on Saul's, Ulasewicz's, Bayma's, and Palus's breach of their NCAs, breaches of fiduciary duties, intentional interference with the employment agreements, misappropriation of trade secrets, conversion of proprietary information, theft of trade secrets, knowing access of Horizon's computer system, and fraud. In doing so, the jury apparently concluded that it was more likely than not that Horizon would have won the Westlake contract absent the misconduct of these defendants and that, in reasonable probability, Horizon would suffer $898, 000 in lost profits as a result. For the reasons explained below, we hold that the evidence is legally insufficient to establish the fact of lost profits damages regarding the Westlake contract with reasonable certainty.

         Texas courts require that a plaintiff seeking damages based on lost profits from future business opportunities adduce evidence establishing that prospective customers would have done business with the plaintiff absent the defendant's misconduct. See, e.g., City of Dall. v. Vills. of Forest Hills, L.P., Phase I, 931 S.W.2d 601, 606-07 (Tex. App.-Dallas 1996, no writ); see also Heine, 835 S.W.2d at 85 (holding that a business owner's testimony was insufficient to establish lost profits where he "was not able to specify which contracts they lost, how many they lost, how much profit they would have had from the contracts, or who would have awarded them contracts" and explaining that the plaintiffs "could have supported their lost profits with testimony that they had lost out on specific contracts" but failed to do so). Thus, to recover lost profits from a contract with Westlake as damages, Horizon needed to present evidence showing that Westlake would have entered into a contract with it.

         We conclude that there is no evidence that Westlake would have entered into a contract with Horizon, as opposed to some other company, had it not signed a contract with PRP. Rather, the evidence shows only that PRP would not have won the Westlake contract absent the misconduct of the individual defendants; no evidence supports the conclusion that Horizon would have won Westlake's business. Horizon's damages expert, Jeff Balcombe, simply assumed that Horizon would have won the Westlake contract if not for the defendants' wrongful conduct, and he specifically stated that he had no opinion as to whether Horizon would have retained Westlake. Further, Balcombe testified that PRP's contract with Westlake included a term providing for a $150, 000 loan or advance of construction costs. Although Balcombe apparently deducted this amount from his calculations, he also acknowledged that he could not recall seeing any Horizon contract containing a similar provision. Piechocki's unrefuted testimony confirms that the Westlake contract included the $150, 000 loan provision and that Horizon never included such terms in its contracts. Additionally, we cannot identify any evidence supporting a conclusion that Westlake would have accepted Horizon's bid had it not accepted PRP's. Indeed, it is equally plausible that Westlake would have rejected all of the bids had it not accepted PRP's proposal. Thus, Balcombe's testimony is insufficient because he admittedly assumed that Horizon would have won the Westlake contract. Horizon argues that the evidence establishes that Westlake was on its lead list before the individual defendants' departures and that the defendants utilized Horizon's trade secrets in preparing PRP's more attractive and winning bid for Westlake's business, supporting an inference that Horizon would have won Westlake's business absent the defendants' misconduct. However, even if we assume that the jury could have reasonably found that the defendants' misconduct allowed PRP to bid on and ultimately win the Westlake contract, it is pure speculation to conclude that Horizon would have won the bid had PRP not made a more attractive offer. This is especially true given that there is no evidence that Horizon would have included a $150, 000 loan or advance of construction costs in its own bid. Put simply, there is no evidence in the record establishing to a reasonable degree of certainty that Horizon would have won the Westlake contract absent the defendants' misconduct, and Balcombe specifically acknowledged that he based his calculations on the assumption that Horizon would have won the Westlake contract had the defendants not committed the underlying torts. Thus, Horizon failed to establish the fact of damages relating to the Westlake contract with reasonable certainty. See Heine, 835 S.W.2d at 85 ("[T]he bare assertion that contracts were lost does not demonstrate a reasonably certain objective determination of lost profits."); see also Coastal Transp. Co. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 232 (Tex. 2004) ("Opinion testimony that is conclusory or speculative is not relevant evidence, because it does not tend to make the existence of a material fact 'more probable or less probable.'" (quoting Tex. R. Evid. 401)).

         In sum, we hold that the evidence is legally insufficient to support the jury's finding that Horizon sustained lost profits with respect to the Westlake contract because the evidence does not establish the fact of damages with reasonable certainty.

         2. Piechocki's Future Sales

         We also conclude that the evidence is legally insufficient with respect to Horizon's claim for lost profits relating to the defendants' wrongful solicitation of Piechocki. As explained below, Balcombe's estimates regarding the amount of time Piechocki would have remained at Horizon and the number of contracts he would have sold during that time are too speculative to constitute competent evidence. Furthermore, no evidence speaks to the profitability of the contracts Piechocki would have sold had he remained at Horizon. Put simply, the record supports the court of appeals' conclusion that Balcombe's testimony regarding the length of Piechocki's future employment at Horizon and the success he would have had during that time was based on improper assumptions and thus conclusory.

         The evidence shows that Piechocki was Horizon's best salesperson and that he was in the top 90% of salespeople in his field. In calculating the damages that resulted from the wrongful solicitation of Piechocki, Balcombe assumed, among other things, that (1) Piechocki, an at-will employee, would have stayed at Horizon for two years if not promoted, or four years if promoted, and (2) Piechocki would have outperformed his average replacement by selling six contracts per year instead of four and that the profitability and initial contract term of each of those contracts would have comported with Horizon's historical averages.

         Balcombe testified that he calculated Piechocki's anticipated length of employment at Horizon based on a statistical analysis, estimating how long Piechocki would have stayed with Horizon absent the defendants' wrongful conduct. Balcombe testified that he "prepared an analysis, looking at employee historical tenure of people in the business development role at the VP level, as well as the senior VP level." This analysis was based on ten years of Horizon's retention data for employees in Piechocki's position, including twenty-four sales vice presidents. Balcombe presented two alternatives. For Alternative 1, Balcombe assumed that Piechocki would have left Horizon after two years had the wrongful conduct not occurred, based on his analysis that the probability of an individual with Piechocki's tenure dropped "below 50 percent after year two if they have been there as long as Mr. Piechocki had." Thus, Balcombe estimated that even if Piechocki had not been promoted, a sales professional with Piechocki's tenure would have remained at Horizon for at least two more years. For Alternative 2, Balcombe assumed that Piechocki would have been promoted to the position of senior vice president of business development and would have left Horizon after four years, based on his calculation of the statistical probability of his continued employment dropping to less than 50% in year four. Balcombe testified that the four-year length of employment assumed in Alternative 2 was "based upon the fact that senior vice presidents stayed longer."

         Balcombe confirmed that, in his Alternative 2 analysis, if Piechocki stayed an additional four years, it was because he was promoted. But Balcombe's assumption that Piechocki would have been promoted was based on a statement by DeVaney and did not take into account whether Piechocki himself intended to stay with Horizon. Indeed, Piechocki's testimony supports that his decision to leave Horizon was motivated in part by DeVaney's decision not to promote him when DeVaney had the chance, upon Ulasewicz's departure, despite Piechocki's specific request that DeVaney consider him for the position. Additionally, nothing in the record suggests that Balcombe considered whether the employees who were the subject of his analysis had signed employment agreements or NCAs and whether that affected the length of their employment. This is particularly significant because Piechocki was not bound by an NCA or any other type of employment agreement-a fact Balcombe conceded but did not factor into his analysis.

         However, Balcombe's assumptions about the prospective length of Piechocki's future employment at Horizon appear to have some ground in fact. See Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex. 1995) (explaining that an expert may offer an opinion based on assumed facts that are established by legally sufficient evidence). Piechocki admitted that: (1) he wanted the promotion; (2) he expressed his interest to DeVaney after the other defendants left; and (3) Horizon's sales manager told Piechocki that she wanted him to take the position. DeVaney essentially scheduled an interview with Piechocki, and DeVaney testified that Piechocki was the "only real option" Horizon had to fill the position from within the company. Piechocki also testified that he had no plans to leave Horizon before he was solicited to join PRP. Rather, Piechocki's decision was motivated in part by DeVaney's decision not to promote him and in part by the opportunity to join PRP.[5] Thus, while scant evidence supports Balcombe's Alternative 2 analysis, at least some evidence supports that Piechocki would not have left Horizon when he did absent the defendants' solicitation in violation of their employment agreements.

         As to the number of sales Piechocki would have won during his continued employment at Horizon, in addition to Horizon's historical sales data showing that Piechocki outpaced his peers two-to-one, an email from Ulasewicz to Saul supports the conclusion that Horizon lost sales as a result of Piechocki's departure. Ulasewicz wrote:

I cannot think of a bigger body blow relative to impacting future new sales for Horizon than to get Piechocki out of there. If he is working for us, you have a very, very formidable sales team. . . . You take him out of Horizon and that will set their sales back at least one year - I mean it will stop - less than five deals. Recruiting effective sales people is very difficult and training takes along [sic] time.

         DeVaney similarly testified to a one-year period before any replacement salesperson could be expected to close a contract. In fact, the loss of Piechocki was particularly harmful because Piechocki had experience in both psychiatric operations and sales, making him uniquely qualified to sell services to hospital operations executives.[6] Furthermore, an email from Saul to Turner stated that, in addition to Ulasewicz, Bayma, and Palus, "we would go hard after John Piechocki, VP

         Sales--as recruiting the 2 best salesmen in the country would be a significant advantage to us and put a real hurt on the competition." In fact, DeVaney specifically testified about how Horizon's sales had been impacted by the loss of Piechocki. DeVaney testified that Horizon signed fourteen new contracts in 2011, the year Piechocki left, but signed only seven new contracts the next year. In total, Horizon sold nine new contracts from the time that Ulasewicz and Piechocki left in the fall of 2011 through the date of the December 2012 trial, but none of those contracts were sold by Piechocki's replacement. Contrasting this with the fact that PRP signed five contracts over that same period-two won by Piechocki and three won by Ulasewicz-makes the evidence detailed above even more compelling. Thus, at least some evidence other than Balcombe's testimony supports that the loss of Piechocki caused Horizon to lose future sales.

         Nevertheless, the fact that Piechocki might have stayed at Horizon a little longer and might have sold contracts generating revenue for Horizon is not enough to establish that Horizon lost profits- evidence establishing the profitability of contracts Piechocki would have sold is necessary. See Miga v. Jensen, 96 S.W.3d 207, 213 (Tex. 2002) ("Lost profits are damages for the loss of net income to a business measured by reasonable certainty." (emphasis added)). But the record does not include evidence regarding the profitability of contracts Piechocki sold or would have sold had he remained at Horizon. Balcombe assumed when formulating his opinion regarding the lost profits damages relating to Piechocki that the value of contracts Piechocki would have sold in the future would have comported with Horizon's historical averages. Put differently, Balcombe based his calculations on the average profit generated by a contract sold by Horizon generally, not the profit generated by the contracts Piechocki sold. Balcombe did this by compiling data of Horizon's profit per contract over an approximately ten-year period. This assumes, however, that the profitability of Piechocki's contracts corresponded with the average profitability of Horizon's contracts. The fact that Piechocki sold more contracts than his peers does not speak to the profitability of those contracts. See id. In fact, we cannot identify any evidence regarding the profitability of any contract Piechocki sold while a Horizon employee. Nor was there any evidence as to whether the contracts sold by Piechocki were more or less profitable than those sold by other salespeople.

         In the absence of evidence showing the profit associated with Piechocki's sales, the number of contracts he might have sold is meaningless, and there is insufficient evidence to determine whether Horizon lost any profit as a result of his departure.[7] In short, Horizon failed to prove the fact of lost profits relating to Piechocki's departure because the evidence speaks only to the number of contracts Piechocki sold previously and might have sold in the future, not the profitability of those contracts. This is fatal to Horizon's claim for lost profits relating to Piechocki. For Horizon to establish lost profits relating to the wrongful interference with a particular employee-that is, to establish with reasonable certainty damages for the lost sales that an employee would have obtained for Horizon absent the wrongful interference-Horizon's evidence estimating those lost profits must be tied to the performance of that employee. Horizon failed to offer such evidence, and the evidence is thus legally insufficient to establish that Horizon lost profits because of Piechocki's departure.

         In sum, we hold that the evidence is legally insufficient to support the jury's finding that Horizon sustained lost profits because the evidence does not establish the fact of damages.[8]

         D. Horizon's Remaining Arguments Regarding Lost Profits

         Horizon argues that the court of appeals' opinion conflicts with our decision in Arkoma Basin Exploration Co. v. FMF Associates 1990-A, Ltd., 249 S.W.3d 380 (Tex. 2008), in which we held that experts need not introduce foundational data supporting their conclusions unless the opposing party or trial court insists. Id. at 389-90 (citing Tex. R. Evid. 705(a)). Horizon's argument is based entirely on a comment by the court of appeals that "Balcombe's calculations, estimates, 'statistical analysis, ' and 'work papers' supporting his conclusions were not admitted into evidence and were merely demonstrative aids" and that "[b]ecause this information was not admitted into evidence, some of Balcombe's explanations for his conclusions are difficult to decipher on appeal." 472 S.W.3d at 89. According to Horizon, the court of appeals erred by finding Balcombe's testimony "not competent" to the extent that his underlying work papers were admitted as demonstratives only. Reading the court's analysis as a whole, it is clear that the absence of Balcombe's work papers did not impact the court of appeals' decision. Rather, as shown above, Balcombe's testimony is insufficient in light of his own testimony that he simply assumed Horizon would have won the Westlake contract and based his estimates regarding the profitability of Piechocki's future sales on the average profit generated by contracts sold by Horizon generally, rather than the profit generated by the contracts Piechocki sold. We conclude that this argument has no merit.

         Horizon also argues that we should remand for a new trial on the issue of lost profits. The court of appeals declined to do so, concluding that "Balcombe's testimony did not establish any amount of lost-profit damages with reasonable certainty." Id. at 90 n.20. According to Horizon, this was an error because "when there is sufficient evidence that lost profits were suffered, the appropriate remedy is either remittitur or remand, not a take nothing judgment." In support of its argument for remand, Horizon relies on our decision in ERI Consulting Engineers, Inc. v. Swinnea, in which we held that courts should suggest remittitur or remand for a new trial on damages where "competent evidence exists to establish some reasonably certain amount of lost profits-just not the particular amount awarded." 318 S.W.3d at 880. We conclude that Swinnea has no applicability to the facts of this case because, as we have explained, the evidence is insufficient to establish that Horizon lost any amount of profits. Rendition is proper on this issue.

         III. Exemplary Damages Against the Individual Defendants

         Acadia argues that the evidence is legally insufficient to support any award of exemplary damages against any defendant because no evidence supports the jury's finding that the individual defendants acted with malice. Acadia also challenges the exemplary damages award as grossly excessive in light of the actual damages sustained by Horizon and thus unconstitutional, even after the court of appeals suggested a remittitur of the exemplary damages award. For the reasons explained below, we hold that legally sufficient evidence supports an exemplary damages award, but we agree with Acadia that the exemplary damages award remains unconstitutionally excessive despite the court of appeals' suggested remittitur.

         A. Sufficiency of the Evidence Supporting an Exemplary Damages Award

         The court of appeals held that legally sufficient evidence supports the jury's finding that all of the individual defendants acted with malice. 472 S.W.3d at 95. We agree.

         Pursuant to the Texas Civil Practice and Remedies Code, "exemplary damages may be awarded only if the claimant proves by clear and convincing evidence that the harm with respect to which the claimant seeks recovery of exemplary damages results from: (1) fraud; (2) malice; or (3) gross negligence." Tex. Civ. Prac. & Rem. Code § 41.003(a). "'Clear and convincing' means the measure or degree of proof that will produce in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established." Id. § 41.001(2). "'Malice' means a specific intent by the defendant to cause substantial injury or harm to the claimant." Id. § 41.001(7).

         "[I]n reviewing the legal sufficiency of evidence to support a finding that must be proved by clear and convincing evidence, an appellate court must 'look at all the evidence in the light most favorable to the finding to determine whether a reasonable trier of fact could have formed a firm belief or conviction that its finding was true.'" Sw. Bell Tel. Co. v. Garza, 164 S.W.3d 607, 609 (Tex. 2004) (quoting In re J.F.C., 96 S.W.3d 256, 266 (Tex. 2002)). In doing so, the "reviewing court must assume that the factfinder resolved disputed ...


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