Trana Discovery, Inc. v. Southern Research Institute

Filing 120

ORDER denying as moot 63 Motion to Strike; granting 75 Motion for Summary Judgment; allowing 79 Motion to Seal Document; denying as moot 81 Motion to Strike ; allowing 84 Motion to Seal Document; granting in part and denying as moot in part 85 Motion to Strike; allowing 95 Motion to Seal; allowing 97 Motion to Seal; granting 116 Motion to Strike; finding as moot 119 Motion for Extension of Time. Signed by US District Judge Terrence W. Boyle on 8/27/2017. (Stouch, L.)

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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No. 5:13-CV-848-BO
TRANA DISCOVERY, INC.,

)
)
)
)

Plaintiff,

v.

)

SOUTHERN RESEARCH INSTITUTE,
Defendant.

ORDER

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)
)
)

This cause comes before the Court on defendant's motion to strike supplemental affidavit
of Dr. Wainburg, motion for summary judgment, motion to exclude expert opinions of Michael
Mischke-Reeds, motion to exclude expert opinions of Mark A. Wainberg, Ph.D., and motion to
strike declaration of Edward Gallagher. The appropriate responses and replies have been filed and
the matters are ripe for ruling. Also pending and ripe for consideration are several motions to seal
documents filed by plaintiff and defendant.
BACKGROUNDl
I.

Procedural history
Plaintiff Trana Discovery (Trana) filed this action on December 12, 2013, alleging claims

arising out of defendant Southern Research Institute' s (SRI) allegedly negligent testing of potential
drug therapy compounds using Trana's technology. Trana's amended complaint alleged claims
for negligent misrepresentation, constructive fraud, and negligence. On October 27, 2014, the

1

The Court also incorporates by reference as if fully set forth herein the factual and procedural
background of this matter as provided in its October 27, 2014 order granting in part defendant's
motion to dismiss. [DE 24].

Court2 dismissed Trana's negligence and constructive fraud claims. Thereafter, Trana moved for
leave to file a second amended complaint in order to add factual allegations and a claim for fraud.
This motion was allowed by order entered September 29, 2015. SRI has now moved for summary
judgment in its favor on all claims. 3
II.

Factual background 4
Trana was formed to create and license assays, which are chemical tests to determine the

presence, absence, or quantity of one or more components of a material. Merriam-Webster
Unabridged Dictionary, available at http://unabridged.merriam-webster.com/unabridged/assay
(last visited August 25, 2017). As general background, the Court notes that
[p]harmacological research assays may be classified into three general categories.
The first are biochemical assays, in which whole cells are broken down and proteins
are separated, purified and test substances applied ..... The second approach,
cellular assays, in contrast, involve the application of test substances to whole cells
to determine the cellular response. Finally, pharmacological researchers will
employ the use of animal studies and eventually human studies in their
development of new pharmacological products.
Bayer AG v. Housey Pharm., Inc., No. CIV. 01-148-SLR, 2003 WL 22953187, at *1 (D. Del. Dec.

4, 2003). Trana developed assays for testing compounds to determine their ability to inhibit the
reproduction of pathogens in the human body by disrupting the pathogen's use of tRNA to
replicate. The first of these assays that Trana created worked to detect compounds which would
inhibit the human immunodeficiency virus' (HIV) interaction with a specific human tRNA protein

2

United States District Judge Fox presided over this case prior to its reassignment to the
undersigned on January 25, 2017.
3
In its compliance with the Court's order to file a second amended complaint as a single
document, Trana filed a second amended complaint which included claims for negligence and
constructive fraud. Because those claims were previously dismissed, and Trana has not argued
in opposition to summary judgment that those claims remain, they are STRICKEN from the
operative complaint.
4
Unless otherwise indicated, the following recitation of the facts is based on plaintiffs statement
of dispute facts. [DE 98]. See Scott v. Harris, 550 U.S. 372, 378 (2007).
2

that the HIV virus uses to replicate itself. Scientists at SRI and Trana later collaborated to create
a methodology for high-throughput screening of compounds using Trana's technology; the result
of this work was the Trana HIV 201 High-Throughput Screening Assay (HTS Assay). The HTS
Assay is a biochemical assay, meaning it does not use living cells, which identifies hit compounds
that show inhibition of the HIV virus'· ability to bind to a particular region of a tRNA protein. A
biological assay, by comparison, is needed to determine if a hit compound identified by Trana's
HTS Assay inhibits replication of HIV in a living cell. Trana contends that its HTS Assay
technology can identify compounds that could direct developers of pharmaceuticals to a new class
of HIV drug.
Based on research it had conducted using Trana's HTS Assay, SRI was awarded in
September 2007 a research contract funded by the National Institute of Allergy and Infectious
Diseases (NIAID), a division of the National Institutes of Health (NIH). The NIAID contract
provided that SRI was to "develop and conduct biochemical, cell-based, and tissue-based assays
to evaluate both the efficacy and toxicity of the drug substances .... ". [DE 99-1 at SRI022754].
The contract further provided that SRI was to incorporate new technologies and strategies as they
become available. Id at SRI022755. Under the terms of the contract, SRI, working with Trana
as the assay sponsor, was responsible for preparing the testing plan, which would be sent to the
NIAID project officer for approval before any work on the contract could begin. [DE 99-4 at 1O]
Miller Interrog. 4. Trana was not a party to the NIAID contract; all funds paid to SRI for work
under the NIAID contract were ~id by NIAID. [DE 76-2] Peterson 5 Dep. at 108. The contract
further prohibited SRI from initiating or conducting studies using contract funds without prior
written approval by the project officer. [DE 991 at SRI022757].

5

Steven E. Peterson is the chief executive officer of plaintiff Trana. [DE 99-7].
3

After the award of the NIAID contract, Trana and SRI entered into a "Material Transfer
and Research Agreement" wherein SRI was required to promptly and fully disclose the results of
its research using Trana's HTS Assay and all rights, title, and interest to all developments,
inventions, and know-how relating to the use of Trana's assay were assigned to Trana. SRI
conducted screening of compounds pursuant to the NIAID contract with the HTS Assay in a
facility in Birmingham, Alabama; compounds which through testing were identified as active in
the HTS Assay were then tested in human cells in a laboratory in Frederick, Maryland. The testing
performed on hits identified by the HTS Assay would use one of two biological assays: CEM-SS,
which are cancer cell biological assays, or peripheral blood mononuclear cell (PBMC) biological
assays, which are sourced from human blood cells.
In 2008, under its contract with NIAID, SRI screened 15,000 compounds using Trana's
HTS Assay and identified 164 compounds as biochemically active. These results were reported
in February 2009. In April 2009, Roger Miller, the NIAID program officer assigned to the
contract, and Roger Ptak from SRI discussed the next phase of testing on hits identified by the
HTS Assay.
Due to the limited contract budget available at this time for this project, Mr. Ptak
proposed eliminating the expensive and time-consuming dose range study of 160
compounds and suggested that testing proceed directly to biological testing of 150
compounds in CEM cells .... I [Miller] also sent an email to Dr. Y enne [with Trana]
requesting his concurrence on the study. He responded by email later that day,
stating that he had a discussion with Mr. Ptak on the telephone and was in
agreement with the plan.
[DE 99-4 at 11] Miller Interrog. 5.
In June 2009, SRI reported that after testing 136 hits from the preliminary screening of
15,000 compounds using Trana's HTS Assay, several of the hits had shown bioactivity against
HIV-1 infected cells. SRI further reported, as is relevant to this litigation, that two compounds,

4

Hits 154 and 156, were inactive when tested; these hits would later be discovered to exhibit
antiviral activity and Trana has referred to these as false negative results. SRI performed the
screening reported in June 2009 using CEM-SS cell lines.
In light of the identification of apparently bioactive compounds in the 15,000 compound
screen, SRI sought and received option funding under the NIAID contract to screen an additional
300,000 compounds. In August 2009, Trana and SRI executed a Technology/Materials Transfer
Agreement assigning intellectual property rights related to the compounds screened under the
NIAID contract to Trana. SRI was to provide all information generated from the testing to Trana
as well as NIAID and Trana was permitted two years to apply for patents on any identified hit
compounds after all screening and confirmatory testing was completed; the time limitation served
as a reservation ofrights to the government to follow up on promising leads that Trana elected not
to pursue as in the public interest. [DE 99-2]; [DE 105-3]. This kind of agreement was unique
between NIAID and an assay provider and it further applied retroactively to compounds tested in
the 15,000 screen.
In January 2010, SRI screened 100,000 compounds using Trana's HTS Assay. In June

2010, SRI reported results from CEM-SS assays performed on compounds identified as bioactive
in the January screening. The June 2010 data report identified Hits 46 and 182 as exhibiting
antiviral activity. Trana applied for patents on Hits 46 and 182, but has let those patents lapse due
to its later discovery that Hits 46 and 182 were false positive results. The results reported in June
2010 were based on testing performed by SRI research technician Melanie Cokonis.
Trana alleges that up until June 25, 2012, SRI continued to assure Trana that the June 2010
data was accurate, and that on June 29, 2012, Trana received information from SRI that SRI had
discovered a "thumb drive" containing bioactivity data. As a result of this discovery, SRI would

5

repeat the bioactivity study which had been included in the June 2010 data report. SRI reported
the results ofretesting on August 24, 2012, including that Hits 46 and 182 were not bioactive. [DE
105-9]. The Office of Research Integrity at NIH lc:tter entered findings of research misconduct as
to Ms. Cokonis specifically related to falsifying assay data submitted to NIH, including data which
improperly identified Hits 46 and 182 as bioactive. [DE 102-2]. 6
A.

CEM cell lines and PBMC cell lines

CEM-S S assays are cancer cell based assays which use laboratory-adapted strains of a virus
for testing. [DE 99-9] Peterson Dep. at 88; [DE 99-10] Buckheit Dep. at 109. PBMC assays are
obtained from human donor blood and can be infected with clinical strains of a virus. [DE 99-1 O]
Buckheit Dep. at 26. CEM cell screening is rapid and inexpensive, while, because the cells are
from live human donors, PBMC cells present cost and variability hurdles which must be overcome
prior to their use in a high-throughput screen. Id at 108-09. Differences in activity between CEM
and PBMC results can be substantial because CEM cells are tumor cells, which by design are
highly-activated and will robustly replicate HIV. Id at 109. Thus, "a compound has to be really
good in order to inhibit replication in CEM cells; whereas if you move into PBMCs, ,a lesser active
compound may look even better." Id at 110. According to Dr. Buckheit, 7 it has been since the
late 1990s that those familiar with the literature of HIV drug development would have been aware
of the fact that the same testing performed in PBMCs and CEMs may yield different results. Id.
at 111.

Pursuant to the NIAID contract, SRI went on to screen the remaining 200,000 compounds with
the HTS Assay in 2011 and to conduct follow-up testing on certain hit compounds identified by
the HTS Assay. [DE 76-2] Peterson Dep. at 203-04. This testing is not the subject of this
lawsuit.
7
Dr. Buckheit has been proffered as an expert by plaintiff. He holds a Ph.D. in microbiology
and immunology from Duke University and completed a postdoctoral fellowship at the
University of North Carolina in HIV biology. Dr. Buckheit was formerly employed by SRI and
in 2004 founded Im Quest, another contract research organization.
6

6

Dr. Miller at NIAID stated as follows regarding the potential effect of differences between
CEM and PBMC cells on the identification of compounds that inhibit the role of tRNA as required
for HIV propagation:
My understanding was that CEM and PBMC assays should be equally effective at
identifying compounds that inhibit the function of tRNA in HIV replication. It is
generally held that testing in continuous cell lines (e.g., CEM cells) that are grown in
the laboratory is cheaper and faster than testing in primary blood cells (e.g., PBMCs)
that must be obtained fresh from human donors for each assay. Testing in continuous
cell lines is also thought to produce more consistent results than testing in primary
blood cells because these cells don't possess the biological variability of cells from
various human donors. However, some investigators chose not to use continuous cell
lines for testing because they represent cells that have been genetically altered to permit
continuous growth.
[DE 99-4at14] Miller Interrog. 8. Dr. Miller further stated that, in approving SRI's plan to use CEMSS assays as opposed to PBMC assays, such approval was done with the knowledge that the testing as
proposed by Dr. Yenne at Trana, to include PBMC assays, was not supported by the contract budget
and that SRI's suggestion of using CEM cells was a cost-effective option. [DE 99-4 at 22] Miller
Interrog. 16.
DISCUSSION
A motion for summary judgment may not be granted unless there are no genuine issues of
material fact for trial and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(a). The moving party bears the initial burden of demonstrating the absence of a genuine issue
of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If that burden has been met,
the non-moving party must then come forward and establish the specific material facts in dispute
to survive summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
588 (1986). In determining whether a genuine issue of material fact exists for trial, a trial court
views the evidence and the inferences in the light most favorable to the nonmoving party. Scott v.

Harris, 550 U.S. 372, 378 (2007). However, "[t]he mere existence of a scintilla of evidence" in

7

support of the nonmoving party's position is not sufficient to defeat a motion for summary
judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). "A dispute is genuine if a
reasonable jury could return a verdict for the nonmoving party.... and [a] fact is material if it
might affect the outcome of the suit under the governing law." Libertarian Party of Virginia v.

Judd, 718 F.3d 308, 313 (4th Cir. 2013) (internal quotations and citations omitted). Speculative or
conclusory allegations will not suffice. Thompson v. Potomac Elec. Power Co., 312 F.3d 645, 649
(4th Cir. 2002).
Trana's claim for negligent misrepresentation is based on both the June 2009 and June 2010
data reports; Trana's claim for fraud is based only on the June 2010 data report. Trana's claims can be
summarized as follows. First, Trana claims that by conducting only CEM-SS assays and not PBMC
assays on compounds identified as hits by Trana's HTS assay, SRI failed to comply with the standard
of care in the industry 8 and as a result deprived Trana of the opportunity to pursue compounds which
were later discovered to be active, specifically Hits 154 and 156. Trana contends that SRI had a duty
to inform Roger. Miller at NIAID that using CEM-SS assays alone would lead to "spurious" results and
that SRI should have recommended use of PBMC assays. This theory is based in part on SRI's use of
PBMC cells to test hits identified by the HTS Assay prior to SRI's work under the NIAID contract.
Second, Trana claims that in June 2010 SRI reported false positive results, specifically Hits 46 and
182, as a result of its overall negligence and the fraudulent acts of its employee Ms. Cokonis. Trana
contends that it acted on SRI's fraudulent testing and reporting of false positive results to its detriment,
specifically incurring costs related to filing for patent protection as well as damage to its reputation. 9

8

1

The parties agree that for purposes of the NIAID contract SRI acted as a contract research
organization (CRO).
9
In opposition to summary judgment, Trana does not argue that it incurred reputational damages
and the Court considers this theory to be abandoned. [DE 92 at 32].
8

I.

June 2009 data report, false negative results
Trana alleges that it would not have made the business or intellectual property decisions

that it did had it known the truth about the methods used by SRI to perform testing on compounds
identified by Trana's HTS Assay. A claim for negligent misrepresentation requires a plaintiff to
show that it has justifiably relied, to its detriment, on information prepared without reasonable
care, by someone who owed the plaintiff a duty of care. Raritan River Steel Co. v. Cherry, Bekaert
& Holland, 322 N.C. 200, 206 (1988).

A.

Motion to strike expert opinions of Mark A. Wainberg, Ph.D.

SRI seeks to exclude, inter alia, the opinions of Dr. Wainberg as to the applicable standards
of care for a contract research organization such as SRI. Federal Rule of Evidence 702 sets out
who may be qualified as an expert and permitted to testify as to his or her opinions in a case. The
threshold inquiry under Rule 702 is whether the witness is qualified to render expert opinion
testimony, which requires a court to determine whether the witness' knowledge, skills, and
experience are sufficiently related to the issues. Gallagher v. S. Source Packaging, LLC, 568 F.
Supp. 2d 624, 634 (E.D.N.C. 2008) (citation omitted).
Dr. Wainberg is director of the McGill University AIDS Centre and he has personally
conducted extensive research on HIV/AIDS. [DE 63-1]. In regard to the standard of care at issue
in this case, Dr. Wainberg in his report opined that SRI "significantly departed from accepted
practices in that it did not employ a full array of cells and cell lines that should have been used in
order to ensure that the results of the research were accurately reported in the research records."

Id at 6. Dr. Wainberg points to SRI's primary use of cancer cells lines (CEMs) as opposed to
PBMCs, noting that, had SRI initially compared its CEM results with those obtained in PBMC for
the same compounds, the discrepancy between the results obtained by these different tests would

9

have been evident. Dr. Wainberg further opined that SRI could not have properly and accurately
represented the results of the research without having done so. Id.
During his deposition, however, Dr. Wainberg made it clear that he does not work in the
contract research organization industry and that he cannot answer what the standard of care is in
that setting. [DE 63-2] Wainberg Dep. at 39; 97. Indeed, Dr. Wainberg stated that he "cannot
answer on what is standard of care in the industry. I don't work in industry." Id at 97. The Court
takes Dr. Wainberg at his word, and strikes his opinion as it relates to the standard of care
applicable to this case.
B.

Negligent misrepresentation

Trana does not contend that SRI improperly conducted the CEM-SS assays reported in the
June 2009 data report. The only issue is whether SRI breached the applicable standard of care by
conducting only CEM-SS assays and not further conducting PBMC assays. The remaining experts
proffered in this case come to no conclusion as to the appropriate standard of care as it relates to
whether CEM or PBMC cell lines are used in this type ofresearch. All of the professionals whose
testimony is in the record seem to agree that CEM cells are less expensive and faster to test and
that PBMC cells, referred to by some as the "gold standard," are more expensive but may provide
more inclusive results. See, e.g. [DE 76-7] Buckheit Dep. at 60 ("CEMs have been a well-accepted
model for screening HIV inhibitors") and 224-25 (Dr. Miller explained to Trana that switching to
CEM cells would be time and cost effective, and there was no duty on SRI to perform PBMC
assays without payment); [DE 76-10] Schinazi 10 Dep. at 74 ("But for testing purposes, normally,
I mean, if you don't have the resources, you do CEM first. It's cheaper. And then if you see some

10

Raymond Schinazi holds a Ph.D. from Bath University in chemistry and was a postdoctoral
fellow at Yale. He is currently professor of pediatrics at Emory University.

IO

hits, you go back to PBMCs."). No remaining expert has testified that to utilize CEM cells under
this contract fell below an applicable standard of care.
Moreover, SRI's work was performed pursuant to an NIAID contract and SRI's
methodology, the use of CEM cells alone, was approved by the project officer Roger Miller.
Indeed, Trana has framed much of its argument in opposition to summary judgment as resting on
SRI' s failure to perform under the terms of the NIAID contract, of which Trana was a third-party
beneficiary. See [DE 92 at 10-11] ("Trana is not asking Southern to do anything more than its
contract with NIH required it to do."). Such argument falls squarely within a claim for breach of
contract, into which Trana cannot shoehorn a claim sounding in tort. See Spillman v. Am. Homes
of Mocksville, Inc., 108 N.C. App. 63, 65 (1992); see also Rountree v. Chowan Cty., 796 S.E.2d
827, 831 (N.C. Ct. App. 2017) ("[A] viable tort action 'must be grounded on a violation of a duty
imposed by operation of law, and the right invaded must be one that the law provides without
regard to the contractual relationship of the parties."') (quoting Asheville Contracting Co. v. City
of Wilson, 62 N.C. App. 329, 342 (1983). Finally, there is no evidence that SRI was under a duty
to recommend to NIAID that it approve the use of PBMC cell lines as opposed to CEM-SS cell
lines. Thus, Trana cannot make out a claim for negligent misrepresentation as to the June 2009
data report and false negative results.
IL

June 2010 data report, false positive results
SRI' s June 2010 data report identifying false positive results also forms the basis of a claim

for negligent misrepresentation as well as a claim for fraud based on Ms. Cokonis' work. A claim
for fraud requires demonstration of the following essential elements: the false representation or
concealment of material fact which is reasonably calculated to deceive, made with the intent to
deceive, and which does in fact deceive, resulting in damage to the injured party. Forbis v. Neal,

11

361 N.C. 519, 527 (2007). Reliance on the alleged false representations must be deemed to be
reasonable. Id.
SRI argues that Trana has failed to proffer sufficient evidence that it suffered damages
related to any of the false positive results identified in the June 2010 data report, defeating its
claims for both negligent misrepresentation and fraud. In opposition to the motion for summary
judgment, Trana argues that it can establish damages from its reliance on the false positive data
because it incurred expenses applying for patents on those compounds. Its specific evidence in
support of these damages is contained in the declaration of Edward Gallagher, which SRI has
moved to strike.
A.

Motion to strike Gallagher declaration

The parties in this case engaged in a lengthy discovery period during which Trana did not
come forward with evidence of patent expenses related to the false positive hits. Neither ofTrana's
Rule 30(b)(6) designated representatives, Edward Gallagher, Vice President for Intellectual
Property and Michael Gallucci, Chief Financial Officer, could provide specific information during
their depositions related to patent expenses. [DE 76-14] Gallagher Dep. at 57-60; [DE 76-15]
Gallucci Dep. at 51-53. Rather, after the close of discovery and in response to SRI's motion for
summary judgment, Trana filed the declaration of Edward Gallagher which reveals that "direct
patent charges and fees incurred for five patents ... as a result of Southern's misrepresentations
about the compounds total about $155,273.00." [DE 104-1] Gallagher Deel. at 2. Mr. Gallagher
further stated that Trana had incurred nuclear resonance imaging expenses in the amount of
$24,477.00. Id.
Fed. R. Civ. P. 26(a)(l )(A)(iii) requires a party to disclose a computation of each category
of damages claimed. Trana does not dispute that it did not provide such computation in its initial

12

disclosures and that it did not supplement its disclosures to provide this information during the
discovery period. Fed. R. Civ. P. 37(c)(l) provides that

If a party fails to provide information or identify a witness as required by Rule 26(a)
or (e), the party is not allowed to use that information or witness to supply evidence
on a motion, at a hearing, or at a trial, unless the failure was substantially justified
or is harmless.
Unlike other sanctionable discovery violations, "Rule 37(c)(l) does not require a finding of bad
faith or callous disregard of the discovery rules." S. States Rack And Fixture, Inc. v. Sherwin-

Williams Co., 318 F.3d 592, 596 (4th Cir. 2003).
A court is guided by several factors in. determining whether the failure to disclose evidence
was unjustified or harmless:
(1) the surprise to the party against whom the evidence would be offered; (2) the
ability of that party to cure the surprise; (3) the extent to which allowing the
evidence would disrupt the trial; (4) the importance of the evidence; and (5) the
nondisclosing party's explanation for its failure to disclose the evidence.

Id at 597 (4th Cir. 2003). Here, Trana admits that its failure to provide a specific computation of
patent-related damages prior to the close of discovery was oversight, [DE 117 at 3 n.2; 6], and it
was therefore unjustified. The evidence is important as it goes directly to an element of Trana's
claims, and without evidence of which its claims fail.
The surprise to SRI in receiving this information after it had deposed two 30(b)(6)
witnesses on this specific topic, after the discovery period had closed, and after SRI had moved
for summary judgment is plain. In order to cure Trana's late disclosure the Court would be
required to. reopen discovery to allow Gallagher to be deposed on this topic as his declaration fails
to provide much more than a lump sum amount of damages. This case was filed in December
2013, and the Court can find no justification in delaying its resolution any further. Further, Trana' s
broader financial disclosures made during the course of discovery do not cure its failure to provide
SRI with specific information relating to the claim for patent-related damages arising from the
13

false positive hits. See, e.g., Silicon Knights, Inc. v. Epic Games, Inc., No. 5:07-CV-275-D, 2012
WL 1596722, at *1 (E.D.N.C. May 7, 2012) ("A party cannot fulfill [the Rule 26(a)(l)(A)(iii)]
requirement by providing 'undifferentiated financial statements; it requires a 'computation,'
supported by documents."' (quoting Design Strategy, Inc. v. Davis, 469 F.3d 284, 295 (2d
Cir.2006)).
The Fourth Circuit recently noted that the decisive issue in this analysis is what the latereceived information actually reveals - where it reveals, for example, a decrease in the amount of
damages claimed, and therefore "does not involve a situation in which a defendant was
'blindsided' by an expert witness' testimony that damages would be greater, or from a different
source," the surprise to the defendant is not great and the Rule 37(c) sanction may not be warranted.
Bresler v. Wilmington Tr. Co., 855 F.3d 178, 193 (4th Cir. 2017). Here, however, it was not until
SRI received Gallagher's declaration that it had notice of the actual amount of damages Trana
would claim arising from the June 2010 data report. Trana should have known the precise amount
of its damages on the day it filed its complaint, and certainly much before the close of discovery
and the middle of the dispositive motions filing period.
For these reasons, the Court finds that the late disclosure by Trana was unjustified and
harmful and that the sanction contemplated by Rule 37(c)(l) is appropriate in this instance. The
post-discovery declaration of Edward Gallagher is hereby STRICKEN.
B.

Negligent misrepresentation and fraud

As the only evidence proffered by Trana of damages flowing from the false positive hits
identified in the June 2010 data report has been stricken, its claims for negligent misrepresentation
and fraud fail and summary judgment in SRI' s favor is appropriate. 11

In addition to being unable to demonstrate a specific computation of damages, it is uncontested
that as early as November 2010,just five months after the June 2010 data report, SRI reported
11

14

CONCLUSION
As they were previously dismissed by order of the Court, plaintiffs claims for constructive
fraud and negligence are STRICKEN from the operative complaint. For the foregoing reasons,
defendant's motion for summary judgment on the remaining claims for negligent
misrepresentation and fraud [DE 75] is GRANTED. Defendant's motion to strike Wainberg [DE
85] is GRANTED IN PART and DENIED IN PART as MOOT. Defendant's motion to strike
declaration of Edward Gallagher [DE 116] is GRANTED.

Defendant's motion to strike

supplemental affidavit of Dr. Wainberg [DE 63] and motion to strike Mischke-Reeds [DE 81] are
DENIED as MOOT.
Also before the Court are several motions to seal. Documents filed in connection with a
summary judgment motion in a civil case are subject to a more rigorous First Amendment standard
when determining whether to limit a right of access of the public to the document. Rusliford v.

New Yorker Magazine, Inc., 846 F.2d 249, 253 (4th Cir. 1988). The requested sealed material
includes materials provided by third-parties pursuant to subpoena which the third-parties have
requested remain confidential. The parties have also tailored their requests to seal to particular
exhibits or documents and have filed agreed-upon portions of many of these documents on the
public record. For these reasons, the motions to seal [DE 79, 84, 95, 97] are ALLOWED.

that Hits 46 and 182 "displayed no antiviral activity or cytotoxicity in the PBMC assays ...."
[DE 76-4 at 58]. It is further undisputed that Trana had access to this information. See [DE 762] Peterson Dep. at 176-77. The Court fails to see how Trana could be found to have reasonably
relied on the June 2010 data in applying for patents when further testing completed just a few
months later revealed the hits not to be bioactive.
15

Finally, the parties have filed a joint motion for extension of time to conduct mediation.
As entry of summary judgment is appropriate, the joint motion [DE 119] is DENIED AS MOOT.

SO ORDERED, this

il

day of August, 2017.

~ lrl_. ~ 7·~_,()__,
..
~NCEW:BOYiE
-l

UNITED STATES DISTRICT JUDGE

16