Auge v. Stryker Corporation et al

Filing 235

MEMORANDUM OPINION AND ORDER by District Judge Kenneth J. Gonzales granting 217 Plaintiff's Motion for Leave to File a Surreply; and denying 211 Defendant's Motion for Reconsideration. (tah)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
WAYNE KENNETH AUGE,
Plaintiff,
vs.

Civ. No. 14-1089 KG/SMV

STRYKER CORPORATION, and
HOWMEDICA OSTEONICS CORP.,
Defendants.
MEMORANDUM OPINION AND ORDER
This matter comes before the Court upon Defendant Stryker’s Motion For
Reconsideration and Plaintiff’s Motion for Leave to File a Surreply. (Docs. 211, 217).
Defendant seeks reconsideration of the Court’s partial summary judgment ruling, entered May
11, 2018. (Docs. 207, 208). Having considered the Motions, the summary judgment record, and
applicable law, the Court will grant leave to file a surreply but decline to reconsider its ruling.
I. Background1
Plaintiff is an orthopedic surgeon who developed devices and techniques for use in
surgery. (Doc. 179) at 3; (Doc. 186) at 16. Between 2000 and 2007, he entered into a series of
Confidentiality Agreements with medical device manufacturer Stryker (individually, Defendant).
(Doc. 178-3) at 1; (Doc. 179) at 3-4; (Doc. 186) at 16.

The parties agreed “to begin discussions

[about] a possible business relationship” relating to Plaintiff’s flexible drill system technologies.
Id. In 2009, Defendant purchased certain intellectual property pursuant to a Royalty Agreement.
(Doc. 178-5); (Doc. 186-1) at 3.

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For clarity, the Background section includes certain key, non-controversial facts from the summary
judgment record. (Docs. 178, 179, 186, and 192).

Over the next few years, Defendant paid royalties as agreed on the TwinLoop FLEX
device. (Doc. 186) at 20. Defendant then developed three new devices, which constitute
Improvements to the confidential flexible drill technology disclosed pursuant to the
Confidentiality Agreements. (Doc. 186-1) at 7; (Doc. 178-1) at 6. The parties tried to negotiate a
royalty agreement with respect to the new devices, but the informal discussions failed. (Doc.
186-1) at 6, 48-58.
On May 12, 2016, Plaintiff filed his First Amended Complaint for Breach of Contract
(Complaint). (Doc. 34). In Count I, he alleges he owns the new devices and any profits
therefrom pursuant to the terms of the Confidentiality Agreements. (Doc. 34) at 8-9; (Doc. 1861) at 6-7. Count I alternatively alleges the Royalty Agreement entitles Plaintiff to royalties on the
new devices. Id. The Complaint also raises various state law claims based on the alleged misuse
of Plaintiff’s intellectual property (Counts II-VII). (Doc. 34) at 10-14.
By two separate motions, Defendant moved for summary judgment on all counts in the
Complaint. (Docs. 178 and 179). The first motion addressed Plaintiff’s claims for breach of the
Confidentiality Agreements (Count I), breach of the Royalty Agreement (Count I), and breach of
the obligation of good faith and fair dealing (Count II). (Doc. 178). The second summary
judgment motion addressed Plaintiff’s remaining “Non-Contract Claims,” including unjust
enrichment (Count VII). (Doc. 179 at 1, 25).

On May 11, 2018, the Court entered partial

summary judgment in favor of Defendant. (Docs. 207, 208). The Court determined the Royalty
Agreement superseded the Confidentiality Agreements with respect to Plaintiff’s flexible drill
technology. (Doc. 207) at 11. Hence, Plaintiff’s claim alleging breach of the Confidentiality
Agreements was dismissed. With respect to the remainder of Count I, however, Defendants

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failed to establish that the Royalty Agreement forecloses royalties on the new devices. Id. at 12.
The Court therefore declined to grant summary judgment on Plaintiff’s remaining contract
claims. Id.
Defendant’s second motion on the “Non-Contract Claims” (Counts III-VII) also yielded
mixed results. The Court dismissed Plaintiff’s claims for common law unfair competition (Count
III); violation of New Mexico’s Unfair Trade Practices Act (Count IV); and misappropriation of
trade secrets (Count V). (Docs. 207) at 13-16. However, the Court denied summary judgment
with respect to Counts VI (quantum meruit) and Count VII (unjust enrichment). Id. The ruling
states, in relevant part:
The[]equitable remedies [of quantum meruit and unjust enrichment] typically “may only
be invoked in the absence of an express contract or when grossly inequitable
circumstances require it.” Arena Resources, Inc. v. Obo, Inc., 2010-NMCA-061, ¶ 16,
238 P.3d 357. Grossly inequitable circumstances include “fraud, real hardship,
oppression, mistake, unconscionable results, and the other grounds of righteousness,
justice and morality.” Id. The Court cannot determine if the circumstances here are
inequitable, and the parties’ contract rights have yet to be defined. Therefore, the
summary judgment motion will be denied with respect to Plaintiff’s claims for unjust
enrichment and quantum meruit.
(Doc. 207) at 14.
The instant Motion to Reconsider challenges the unjust enrichment ruling (Count VII).
(Doc. 211). Defendant contends the Court should have applied New Jersey unjust enrichment
law. Alternatively, Defendant contends the claim should be dismissed under New Mexico law.
Plaintiff filed a response to the Motion, Defendant filed a reply, and Plaintiff sought leave to file
a surreply. (Docs. 212, 213, and 217). Because the latter request is unopposed, the Court will
grant the motion (Doc. 217) and consider the surreply pursuant to D.N.M. LR-Civ 7.1(b) and
7.4(b).

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II. Discussion
Defendant moves for reconsideration under Fed. R. Civ. P. 54(b) (interlocutory orders)
and 59(e) (final orders). The parties agree, and the case law confirms, that the same general
standard applies under both rules. See Ankeney v. Zavaras, 2013 WL 1799997, * 3 (10th Cir.
2013); Tomlinson v. Combined Underwriters Life Ins. Co., 684 F. Supp. 2d 1296, 1299 (N.D.
Okla. 2010); Sump v. Fingerhut, Inc., 208 F.R.D. 324, 326-27 (D. Kan. 2002). Grounds for
reconsideration include: “(1) an intervening change in the controlling law, (2) new evidence
previously unavailable, and (3) the need to correct clear error or prevent manifest injustice.”
Servants of the Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000). A motion to reconsider
is also “appropriate where the court has misapprehended the facts, a party’s position, or the
controlling law.” Id.
Defendant primarily contends the Court erred by applying New Mexico law, rather than
New Jersey law, to the unjust enrichment claim (Count VII).2 Specifically, Defendant argues the
Royalty Agreement’s choice-of-law provision governs the unjust enrichment claim, as that is the
only contract now at issue. Defendant did not urge the Court to apply New Jersey contract
principles to Count VII in its summary judgment papers. (Doc. 179) at 25-27. To the contrary,
the motion labels Count VII as a “Non-Contract Claim,” and cites New Mexico unjust enrichment
law in support of dismissal. Id. at 1, 25-27. It is well-established that a motion to reconsider
cannot be based on new “arguments that could have been raised in prior briefing.” Servants of

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Unlike New Mexico, New Jersey has not adopted exceptions to the rule prohibiting recovery for unjust
enrichment when an express contract exists. Compare Winslow v. Corp. Express, Inc., 364 N.J. Super.
128, 143, 834 A.2d 1037 (N.J. App. Div. 2003) (following general rule) with Arena Resources, Inc. v.
Obo, Inc., 2010-NMCA-061, ¶ 16, 238 P.3d 357 (creating exception for “grossly inequitable
circumstances”).

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Paraclete, 204 F.3d at 1012.
Moreover, even if the Court considered Defendant’s new argument, New Jersey law does
not mandate reconsideration. New Jersey law prohibits a recovery for both unjust enrichment and
breach of contract. See generally Winslow v. Corp. Express, Inc., 364 N.J. Super. 128, 143, 834
A.2d 1037 (N.J. App. Div. 2003). However, plaintiffs are expressly permitted to present the two
alternative theories at trial. See Caputo v. Nice-Pak Prod., Inc., 300 N.J. Super. 498, 505, 693
A.2d 494, 497 (N.J. App. Div. 1997) (allowing plaintiff to present alternative theories and noting,
“if the jury found that there was no valid contract, the jury could then consider whether plaintiff
nonetheless might recover for unjust enrichment”). The Court is therefore not required to dismiss
the unjust enrichment claim simply because it denied summary judgment with respect to the
contract claim. As the Court noted, “the parties’ contract rights have yet to be defined.” (Doc.
207) at 14.
Assuming it cannot prevail under New Jersey law, Defendant next points to an
intervening change in New Mexico law, Beaudry v. Farmers Ins. Exchange, 2018-NMSC-012,
412 P.3d 1100. Beaudry held that prima facie tort claims cannot undermine a defendant’s ability
to exercise its contract rights. Id. at ¶¶ 17-28.

The decision was based on policy considerations,

as prima facie tort advances a “‘novel’ cause of action” that should not “evade other established
doctrines of law.” Id. at ¶¶ 13-14. Unlike prima facie tort, unjust enrichment is an established,
equitable doctrine frequently asserted alongside contract claims. See generally Arena Resources,
2010-NMCA-061. Hence, Beaudry does not warrant reconsideration in this case.
Defendant finally contends Count VII should be dismissed because the summary

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judgment findings3 demonstrate there are no unjust circumstances in this case. The Court
disagrees. The findings primarily quote the relevant contract provisions and describe when
Defendant developed certain devices. (Doc. 207) at 2-6. They contain no information evidencing
whether, and to what extent, Defendant unfairly benefitted at Plaintiff’s expense. Thus, the
summary judgment findings do not resolve the unjust enrichment claim.
III. Conclusion
Having determined there are no grounds to reconsider the summary judgment ruling, the
Motion must be denied.
IT IS ORDERED that
1. Plaintiff’s Motion for Leave to File a Surreply (Doc. 217) is granted.
2. Defendant’s Motion for Reconsideration (Doc. 211) is denied.

__________________________________
UNITED STATES DISTRICT JUDGE

The Court uses the term “findings” to mean facts not subject to genuine dispute in the summary judgment ruling.
Unless and until the Court orders relief under Rule 56(g), summary judgment facts are not established in the case.
See Fed. R. Civ. P. 56(g) (“If the court does not grant all the relief requested by the motion, it may enter an order
stating any material fact — including an item of damages or other relief — that is not genuinely in dispute and
treating the fact as established in the case.”).
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