National Pasteurized Eggs, LLC v. Davidson

Filing 161

ORDER denying 159 Motion for Reconsideration re: 157 Judgment Pursuant to Federal Rule of Civil Procedure 59. So Ordered by Chief Judge Joseph N. Laplante.(jb)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
National Pasteurized
Eggs, LLC
v.

Civil No. 07-103-JL

L. John Davidson
SUMMARY ORDER
Following a non-jury trial, this court issued lengthy and
detailed findings of fact, rulings of law, and an order for
judgment in favor of plaintiff National Pasteurized Eggs, LLC
(“NPE”) on its claim that it--rather than defendant L. John
Davidson--owns United States Patent 6,692,784 (the “Jumbo”),
covering a process for pasteurizing chicken eggs in their shells.
Nat’l Pasteurized Eggs, LLC v. Davidson, 2011 DNH 208.

NPE

traced its ownership to an agreement (the “GSM”) between Davidson
and a now-defunct company he founded, Pasteurized Eggs
Corporation (“PEC”), the assets of which NPE purchased after PEC
declared bankruptcy.
The GSM provides, in essence, that PEC owned inventiveness
developed prior to January 1, 2001, while Davidson owned
inventiveness--so long as it “result[ed] in protection from new
patents or patent applications providing broader or improved
protection”--developed on or after that date.

Id. at 14.

Accordingly, whether the inventiveness claimed in the Jumbo was
developed before or after January 1, 2001 was the principal

factual issue at trial.

Based on the evidence it received on

this point, the court found that the inventiveness had in fact
been developed prior to January 1, 2001, id. at 26, and, after
rejecting Davidson’s arguments as to the enforceability and
interpretation of the GSM, ruled that NPE owned the Jumbo.
Since the judgment issued, Davidson has filed a motion to
alter it, under Rule 59(e) of the Federal Rules of Civil
Procedure, so that it awards ownership of the patent to him
instead.

The motion is denied.

Generally, “Rule 59(e) motions

are granted only when the movant shows a manifest error of law or
newly discovered evidence.”

Kansky v. Coca-Cola Bottling Co. of

New Eng., 492 F.3d 54, 60 (1st Cir. 2007).

Davidson’s motion, on

its face, makes no attempt to demonstrate either.

Instead, he

argues that this court erred in finding that (1) certain
inventiveness embodied in the Jumbo was developed prior to
January 1, 2001, (2) the GSM was an enforceable agreement, and
(3) the GSM’s conditions precedent to his assignment of the
intellectual property were satisfied.

None of these conclusions

was an error, let alone a manifest one.
First, Davidson challenges this court’s finding that one
aspect of the Jumbo, pasteurizing the eggs by passing them
through zones of three different temperatures in a single tank of
heated water, had been developed prior to January 1, 2001.
Pasteurized Eggs, 2011 DNH 208, 8-9.
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Nat’l

In making this finding,

this court relied on a memorandum that Davidson had written to
PEC’s patent counsel on November 14, 2000, i.e., before January
1, 2001.

Id. at 46.

The memorandum stated that “testing has

been performed successfully” on essentially the same threetemperature process claimed in the Jumbo.

Id.

Davidson does not question that the memorandum adequately
supports the court’s finding that the three-temperature process
was developed prior to January 1, 2001.

Instead, he complains

that the court’s reliance on the memorandum was “not warranted”
in light of conflicting evidence, viz., the testimony of Davidson
and another witness involved in developing the process, Myron
“Mike” Wagner.1

As the court observed, Davidson testified that

the memorandum reflected results that he had “anticipated” but
had yet to actually occur, while Wagner testified that the
discovery of the three-temperature process happened in 2001
because, he recalled, the discovery post-dated two other events

1

Davidson also relies on statements from two other
witnesses: trial testimony by Mike Myshrall (who worked with
Wagner in developing the pasteurization process) and a
contemporary memorandum by Dan Best (who was a member of PEC’s
board of directors during some of the relevant events). Neither
is inconsistent with the court’s finding. Myshrall did not
testify as to when the three-temperature process was developed,
and none of his testimony as to when other events occurred
undermines the court’s conclusion on that point. Best’s
memorandum simply told Davidson, in October 2001, that “the
further multiple temperature work that you proposed doing is very
important to get underway” (emphasis added). It does not follow
from this that the three-temperature process claimed in the Jumbo
had not already been developed by then.
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that happened that year.2

Id. at 8 & n.4.

The court

specifically explained, however, that it chose to credit
Davidson’s contemporaneous memorandum rather than trial testimony
by him expressing “newfound modesty as to the status of his
inventions” or by Wagner, “who came across as an entirely
forthcoming witness at trial, but was attempting to remember
events that happened 10 years or so ago.”

Id. at 9.

Faced with conflicting evidence on an important factual
issue, then, the court simply chose to rely on Davidson’s
contemporaneous statement rather than trial testimony about
events from roughly a decade earlier.

2

While Davidson

In his Rule 59(e) motion, Davidson also points to a trial
exhibit, which was entitled “Cheat Sheet for Procedure Changes”
and was essentially Wagner’s contemporaneous log of his work on
the pasteurization process at PEC’s South Carolina facility.
Davidson argues that this document “demonstrates that the testing
for the two temperature process in South Carolina did not begin
until” November 14, 2000--the same day that Davidson sent his
memorandum stating that the three-temperature process had been
successfully tested. The court specifically recognized, however,
that the three-temperature process could not have been tested in
South Carolina (before or after to January 1, 2001) because “the
heat exchangers at the South Carolina facility were not powerful
enough to accomplish that.” Nat’l Pasteurized Eggs, 2011 DNH
208, at 7. Instead, the court found that the testing of the
three-temperature process first occurred at a facility in New
Hampshire where PEC, beginning in late 2000, had started
manufacturing a new pasteurization machine to be used at a
different plant. Id. Davidson does not question this finding.
So the “cheat sheet,” which described PEC’s work in South
Carolina, not in New Hampshire, does not undermine the court’s
finding that the three-temperature process was successfully
tested before January 1, 2001.
4

understandably disagrees with this decision, it was no manifest
error.

Indeed,

“[w]here there are two permissible views of the evidence, the
factfinder’s choice between those competing views cannot be
clearly erroneous.”

Monahan v. Romney, 625 F.3d 42, 46 (1st Cir.

2010) (quotation marks omitted).
Davidson also argues at length that the claims of the Jumbo
“should have an effective filing date” of the final patent
application because the claims in the Jumbo as ultimately issued
were not “disclosed” in the provisional applications and were
“therefore developed after January 2001.”
does not follow from its premise.

This conclusion simply

As NPE points out, the

relevant sections of the GSM did not assign inventiveness to PEC
or Davidson depending on when it was “disclosed,” but on when it
was “developed.”

So Davidson’s claim that the inventiveness in

the Jumbo was not disclosed, in publicly filed patent
applications, until August 2001 at the earliest (even if
accurate) is perfectly consistent with the court’s finding that
the inventiveness was developed prior to January 1, 2001.

That

finding was not error.
Second, Davidson argues that the court was “simply mistaken”
to rule that the GSM was an enforceable agreement, rather than an
unenforceable “agreement to agree,” as he had claimed at trial.
This argument is deliciously ironic, in light of the fact that
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Davidson has repeatedly stated in court filings--including his
own counterclaim in this action--that the GSM “contained all the
essential terms of the parties’ agreements and was effective and
enforceable as the agreement by its express terms.”
Pasteurized Eggs, 2011 DNH 208, 29-30.

Nat’l

In any event, as the

court observed, “‘[a] written memorandum is sufficient to
establish a contract if it demonstrates that the parties have
manifested their intent to be bound to the essential terms of a
more detailed forthcoming agreement,’” id. at 28 (quoting Lower
Vill. Hydroelec. Assocs., L.P. v. City of Claremont, 147 N.H. 73,
75 (2001)), and the parties did so here in the GSM itself, which
specifically states that it “will be binding until such time as
further Settlement Documents are prepared and accepted,” id.
Davidson does not quibble with the court’s finding that this
provision manifested the requisite intent to be bound.

Instead,

he argues that this court’s reliance on Lower Village
Hydroelectric was “misplaced” because, there, the “further
negotiations related only to minor details and were not essential
to contract formation.

In this case, the details to be worked

out were significant in nature, including the scope of the
intellectual property” to be assigned.
this issue:

But the GSM does address

as the court observed, “the GSM assigns ownership

depending on whether patents were issued or applied for, or
‘Inventiveness’ was ‘developed,’ prior to January 1, 2001, and
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sets forth detailed provisions for PEC to license any
intellectual property assigned to Davidson.”

Nat’l Pasteurized

Eggs, 2011 DNH 208, 27-28.
Davidson does not quibble with this observation either.
Instead, he points to what he calls “an abundance of evidence
that the parties continued to negotiate the scope and terms of”
the GSM’s assignment provisions.

The court disagrees with this

characterization of the record but, even taking it at face value,
the fact remains that the parties specifically stated in the GSM
that it was to be binding until further documents were drafted.
That, again, manifested the requisite “intent to be bound by the
essential terms of an agreement even though details remain to be
worked out,” and those essential terms were sufficiently spelled
out in the GSM, as the court concluded.

Id. at 27-29.

This

conclusion was not error, manifest or otherwise.
Third, Davidson argues that the court “ignore[d] the impact
of specific conditions precedent” to his performance of the
assignment under the GSM.

In fact, even though Davidson never

characterized any provisions of the GSM as “conditions precedent”
in any of his arguments before, during, or after the trial, the
court so construed his contention that he “was under no
obligation to transfer intellectual property to PEC” because it
had failed to honor certain payment obligations imposed by the
GSM.

Id. at 30.

But the court ruled that, even though two of
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these obligations amounted to conditions precedent, one had been
satisfied and performance of the other--which called for Davidson
to receive reimbursement for certain expenses at “the closing of
the agreement”--had never become due because the “closing” never
occurred.

Id. at 31-32.

Davidson essentially acknowledged as

much in his trial testimony.

Id. at 32.

Davidson now argues that this reading of the GSM “strains
the bounds of reasonableness” insofar as it allows PEC “to
sidestep” its obligation to pay Davidson “[s]imply because a
settlement”--by which he presumably means the closing on the
settlement--“was not achieved before PEC sought bankruptcy
protection.”3

This is nothing more than a reformulation of

Davidson’s complaint that it is unfair to hold him to his promise
to assign intellectual property to PEC since it dishonored its
promises to make various payments to him.

As this court has

already explained, Davidson “exposed himself to this risk by
signing the GSM,” which “assigns the specified intellectual
property without conditioning the assignment on . . . [PEC’s]
compliance with any of its obligations to him (save those

3

It is not necessary, but it is worthwhile, to note that the
effective date of the GSM was September 20, 2001, but PEC did not
file for bankruptcy protection until more than a year later, on
October 5, 2002. So Davidson’s suggestion that it was PEC’s
bankruptcy filing that prevented it from closing on the GSM is
inaccurate. If anything, it was Davidson’s efforts to
renegotiate the essential terms of the GSM after signing it that
delayed the closing. Nat’l Pasteurized Eggs, 2011 DNH 208, 17.
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expressly made conditions precedent . . .).”

Id. at 37-38.

Again, while one of those conditions precedent obligated PEC to
reimburse Davidson for certain expenses, that reimbursement, by
the express terms of the GSM, did not become due until the
closing on the parties’ agreement--and that never happened.
PEC’s “failure” to tender that reimbursement, then, had no effect
on Davidson’s assignment of the intellectual property which, in
contrast, occurred upon execution of the GSM.

Id. at 37.

This

conclusion was not error either.
Because Davidson has failed to show any manifest error in
the court’s findings and rulings supporting its judgment in NPE’s
favor, his motion to amend that judgment (document no. 159) is
DENIED.
SO ORDERED.

____________________________
Joseph N. Laplante
United States District Judge
Dated:
cc:

March 2, 2012

Peter G. Callaghan, Esq.
Adam Taylor Rick, Esq.
David H. Bownes, Esq.
Paul C. Bordeau, Esq.

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