Argentum Medical, LLC v. Noble Biomaterials et al
Filing
360
MEMORANDUM AND ORDER denying 306 Motion for Judgment as a Matter of Law; denying 308 Motion for New Trial. Signed by Honorable A. Richard Caputo on 9/23/11 (jam, )
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
NOBLE BIOMATERIALS,
CIVIL ACTION NO. 3:08-CV-1305
Plaintiff,
(JUDGE CAPUTO)
v.
ARGENTUM MEDICAL, LLC, THOMAS
MILLER and GREGG SILVER,
Defendants.
MEMORANDUM
Presently before the Court are Counterclaim Defendants’ Renewed Motion for
Judgment as a Matter of Law and Motion for a New Trial. Because there was sufficient
evidence from which the jury could find the Defendants liable, the Court made no error
affecting the Defendants’ substantial rights, and the jury awards do not shock the
conscience, both motions will be denied.
I. Background
A. SILVERLON and SILVERSEAL
Counterclaim Plaintiffs Noble Biomaterials is a company that produces silvercoated nylon fabric using an autocatalytic electroless silver process. Trial Tr. vol. 2,
24:21-25:10, Feb. 2, 2011, ECF No. 283. In approximately 1989, Noble became aware
that silver-coated nylon fabric bandages were effective at fighting bacteria in wounds.
Trial Tr. vol. 2, 36:25-37:16. It then began selling products that capitalized on the
bacteria-fighting qualities of silver. Trial Tr. vol. 2, 51:9-15. Among its customers was
Argentum International, a company specializing in wound care products. Trial Tr. 58:1659:7.
Argentum International sold single-layer wound dressings of coated silver under
the name SILVERLON. Trial Tr. vol. 4, 87:21-88:9, Feb. 3, 2011, ECF No. 284. The
SILVERLON dressings used silver fabric purchased from Noble, coated using the
autocatalytic electroless plating process. Trial Tr. vol. 4, 147:6-19. The use of the
autocatalytic electroless plating process has an advantage because the silver is coated
uniformly, which makes the dressing more effective as an antimicrobial. Trial Tr. vol. 3,
147:20-148:4. Noble later sold the same products to an entity formed out of Argentum
International, Defendant Argentum Medical. Trial Tr. vol. 2, 58:20-59:7; Trial Tr. vol. 4,
89:25-90:4.
In 2004, Noble began developing its own wound contact dressings using its silvercoating technology, calling this line of products “SILVERSEAL.” Trial Tr. vol. 4, 16:414:15. Noble first publicly introduced the SILVERSEAL brand at a trade show in October
2004. Trial Tr. vol. 4, 199:11-200:7. At that show, Defendant Thomas Miller, President
of Argentum Medical, told many attendees that the SILVERSEAL product was “knocking
off” SILVERLON. Trial Tr. vol. 4, 199:10-25. One attendee who heard this explained she
interpreted it to mean that SILVERSEAL was infringing upon SILVERLON. Trial Tr. vol.
4, 199:10-25. Defendants repeated similar claims at successive trade shows. Trial Tr.
vol. 4 205:20-206:4, 207:17-25, 208:21-209:1, 211:1-3, 211:22-25, 212:16-20, 213:17-22,
215:14-18, 219:11-22; Trial Tr. vol. 5, 226:3-227:1, Feb. 4, 2011, ECF No. 285; Trial Tr.
vol. 6 4:1-24, Feb. 7, 2011, ECF No. 296.
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After learning that Noble had introduced its SILVERSEAL brand, Defendant Gregg
Silver, the Chief Executive Officer of Argentum Medical, ordered the filing of a patent
application. Trial Tr. vol. 4, 251:20-252:12. The application, filed on April 29, 2005, was
for a single layer wound dressing with wound-healing capabilities, and it named as
inventor Dr. Bart Flick. Trial Trial Tr. vol 4, 254:7-10; Tr. vol. 5, 7:2-12. The application
was filed as a continuation on a previous patent that traced back to Patent Number
6,087,549 (the “‘549 patent”). Trial Tr. vol. 4, 253:10-15. The Patent and Trademark
Office granted the application and issued Patent Number 7,230,153 (the “‘153 patent”) on
June 12, 2007.
B. Patent Rights Transfers and Georgia Litigation
The ‘153 patent names A. Bart Flick as its inventor and Argentum International as
the assignee. Argentum Med., LLC v. Noble Biomaterials, No. 08-1305, 2010 WL
2650493, at *1 (M.D. Pa. 2010). In November 2000, Flick signed an agreement
conveying International’s rights in the patent to Argentum Research. Id, at *5; Argentum
Intern., LLC v. Woods, 634 S.E.2d 195, 199 (Ga. App. 2006). Then in February 2011,
Flick made another assignment, this time from International to Argentum Medical–despite
the fact that he had already transferred International’s rights in the patent to Research.
See Woods, 634 S.E.2d at 199. To remedy this situation, International and Research
entered into a nunc pro tunc agreement that was meant to date back and transfer the
rights in the ‘153 patent back to Argentum International. Id.
Flick, Miller, and International would eventually be found liable in a Georgia state
court action for fraud and conspiracy, based on the fact that they misrepresented
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Argentum International’s patent rights ownership to investors. Woods, 634 S.E.2d 195
(affirming lower court).
C. Litigation
On December 7, 2007, Argentum Medical filed a patent infringement suit against
Noble and its principal distributor, Derma Sciences, Inc. (who tendered its defense to
Noble based on their distribution agreement). The patent infringement claim was
dismissed for lack of standing on the grounds that Argentum Medical did not at any time
have legal title to the ’153 patent. Noble Biomaterials, 2010 WL 2650493, at *5. It was
determined that Argentum International did not have rights to the patent at the time it
transferred it to Argentum Medical, and the nunc pro tunc agreement was invalid. Id.
The case proceeded to a jury trial upon Counterclaim Plaintiff Noble’s Lanham Act,
product disparagement, and unfair competition counterclaims against Counterclaim
Defendants Argentum, Thomas Miller, and Gregg Silver. During the trial, Defendants
moved for judgment as a matter of law. The motion was denied, and the case was
decided by a jury. The jury found that all Defendants violated the Lanham Act and
engaged in product disparagement, and it found that Silver engaged in unfair
competition. The jury awarded Noble $1 million in compensatory damages, which it
assessed against Argentum. It also awarded Noble $2.25 million in punitive damages,
which it assessed against Miller in the amount of $1 million and Silver in the amount of
$1.25 million.
Defendants filed the instant motions on March 10, 2011. The motions have been
fully briefed and are ripe for disposition.
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II. Discussion
A. Judgment as a Matter of Law
Defendants seek judgment as a matter of law pursuant to Federal Rule of Civil
Procedure 50(b). Under Rule 50(a), “[i]f a party has been fully heard on an issue during a
jury trial and the court finds that a reasonable jury would not have a legally sufficient
evidentiary basis to find for the party on that issue,” the court may grant judgment as a
matter of law on that issue. Rule 50(b) allows a party whose 50(a) motion has been
denied to renew the motion after trial. It also gives a party the option to include a joint
request for a new trial under Rule 59.
1. Standard of Review
A court ruling on a Rule 50 motion must determine “whether, viewing the evidence
in the light most favorable to the non-movant and giving it the advantage of every fair and
reasonable interest, there is insufficient evidence from which a jury reasonably could find
liability.” W.V. Realty Inc. V. N. Ins. Co. of N.Y., 334 F.3d 306, 311 (3d Cir. 2003).
Motions for judgment as a matter of law should be granted “sparingly.” CGB
Occupational Therapy, Inc. v. RHA Health Servs. Inc., 357 F.3d 375, 383 (3d Cir. 2004).
The remedy is appropriate only where “‘the record is critically deficient of a minimum
quantum of evidence’ in support of the record.” Johnson v. Campbell, 332 F.3d 199, 204
(3d Cir. 2003). “The question is not whether there is literally no evidence supporting the
unsuccessful party, but whether there is evidence upon which a reasonable jury could
properly have found its verdict.” Id.
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2. Waiver
A defendant who fails in his Rule 50(a) motion to raise an issue “with sufficient
specificity to put the plaintiffs on notice” waives the right to raise the issue on a later
renewed motion under Rule 50(b). Williams v. Runyon, 130 F.3d 568, 571-72 (3d Cir.
1997) (citing 90 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure
§ 2533 (1995); Orlando v. Billcon Int’l Inc., 822 F.2d 1294, 1297-98 (3d Cir. 1987);
Perdoni Bros., Inc. v. Concrete Sys., Inc., 35 F.3d 1, 3 (1st Cir. 1994)). Defendants here
raise arguments in their renewed motion for judgment as a matter of law pursuant to Rule
50(b) that they did not raise in their original motion for judgment as a matter of law.
First, they argue that Noble cannot prove bad faith because Defendants did not know
their statements made at trade shows were false. Second, they object to the awarding of
punitive damages. Third, they argue that the jury’s verdict necessarily implies that the
Defendants did not act in bad faith Because they did not raise these issues with
sufficient specificity to put Noble on notice during their first motion, Defendants have
waived the right to assert these arguments in their renewed motion.
3. Bad Faith
Defendants’ remaining argument in favor of judgment as a matter of law is that
Noble failed to prove bad faith on the part of the Defendants, and thus their Lanham Act
claim fails. The Federal Circuit has established that unless bad faith is shown, federal
patent laws preempt state tort or federal Lanham Act claims against a patent holder that
are based on enforcing a patent in the marketplace. Zenith Elecs. Corp. v. Exzec, Inc.,
182 F.3d 1340, 1353-54 (Fed. Cir. 1999).
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The parties first dispute whether Noble is required to establish bad faith in this
case. Noble argues that because Defendants were not actually the patent owners, they
had no right to enforce that would necessitate the protection of a bad faith requirement.
Although the Federal Circuit has not directly addressed the issue of a bad faith
requirement for non-patentholders, Noble notes that in discussing the bad faith
requirement, the Federal Circuit consistently states that it applies to patentholders. See,
e.g., 800 Adept, Inc. v. Murex Sec., Ltd., 539 F.3d 1354, 1369 (Fed. Cir. 2008) (“State
tort claims against a patent holder . . . are ‘preempted’ by federal patent laws, unless the
claimant can show that the patent holder acted in “bad faith.”) (emphasis added); GP
Indus., Inc. v. Eran Indus., Inc., 500 F.3d 1369, 1374 (Fed. Cir. 2007) (“[A] patentee has
a right to inform potential infringers of a patent and potentially infringing activity unless
the communication is made in bad faith.”) (emphasis added); Zenith Elecs. Corp. v.
Exzec, Inc., 182 F.3d 1340, 1353 (Fed. Cir. 1999) (“[A] patentee’s statements regarding
its patent rights are conditionally privileged under the patent laws.”) (emphasis added);
Mikohn Gaming Corp. v. Acres Gaming, Inc., 165 F.3d 891, 897 (Fed. Cir. 1998)
(“Federal precedent is that communications to possible infringers concerning patent
rights is not improper if the patentholder has a good faith belief in the accuracy of the
communication.”) (emphasis added). The use of this language comports with the
purpose of the bad faith requirement, which exists because “a patent owner has the right
to . . . enforce its patent, and that includes threatening alleged infringers with suit.” Golan
v. Pingel Enter., Inc., 310 F.3d 1360, 1370 (Fed. Cir. 2002) (quoting Concrete Unlimited,
Inc. v. Cementcraft, Inc., 776 F.2d 1537, 1538 (Fed. Cir. 1985)). Defendants were not
patent owners, licensees, or agents speaking on behalf of the patentholder. Therefore,
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they had no right to enforce the patent, and there is no need to protect them with a bad
faith requirement.
Defendants cite to two cases where a bad faith requirement was applied to nonpatentee, but those cases are distinguishable because both involved unfair competition
claims against parties who at some point were owners of the patent at issue. First, in
Golan v. Pingel Enterprise, Inc., the bad faith requirement was applied to a former patent
holder whose patent had expired prior to his alleged acts of unfair competition. 310 F.3d
1360, 1370-71 (Fed. Cir. 2002). Next, in Scosche Industries, Inc. v. Visor Gear Inc., the
bad faith requirement was applied to a patent holder whose first of three alleged acts of
unfair competition took place after he had applied for his patent but prior to the PTO’s
issuing of the patent. 121 F.3d 675, 676 (Fed. Cir. 1997). These cases do not serve to
establish that the bad faith requirement must be applied to defendants like those in this
case, who never at any point owned the rights to the patent at issue.
Defendants also argue that the bad faith requirement must still apply because
§287(a) of the Patent Act expressly authorizes non-patentees to make give notice that a
product is patented. See 35 U.S.C. § 287. But § 287(a) allows non-patentees to fix the
word “patent” onto a patented article of its packaging–nowhere does it state that nonpatentees are privileged to make assertions about alleged infringements. Id. Section
287(a) of the statute is thus irrelevant to the issue at hand. Based on Federal Circuit
precedent and the purpose of the bad faith requirement, I hold that the bad faith
requirement does not apply in this case.
Even if there was a bad faith requirement in this case, the record contains
sufficient evidence from which a jury could find bad faith. “Bad faith includes separate
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objective and subjective components.” Dominant Semiconductors Sdn. Bhd. v. OSRAM
GmbH, 524 F.3d 1254, 1260 (Fed. Cir. 2008) (citing Mikohn Gaming, 165 F.3d 891, 897
(Fed. Cir. 1998)). The objective component requires a showing that the infringment
claims were “objectively baseless,” meaning that “no reasonable litigant could reasonably
expect success on the merits.” Id. (internal quotations omitted) (quoting GP Indus., Inc.,
500 F.3d at 1374). Here, because Defendants did not have the rights to enforce the
patent, its infringement claims were objectively baseless. Additionally, the jury received
sufficient evidence from which they could reasonably conclude that the Defendants
believed that the ‘153 patent was unenforceable and invalid. Noble presented evidence
that Defendants knew Argentum International did not own the rights to the ‘153 patent
and thus could not assign it to them.. Noble also presented evidence that Silver and
Miller did not reasonably believe that the subject matter of the ‘153 patent was patentable
because it had been marketed for years and that they engaged in fraud against the
Patent and Trademark Office. This evidence satisfies the subjective component of bad
faith. Therefore, viewing the evidence in the light most favorable to Noble, there was
sufficient evidence to overcome judgment as a matter of law in favor of the Defendants.
C. New Trial
Defendants have alternatively moved for a new trial under Rule 59. Rule 59 states
that a court may grant a new trial on some or all of the issues “for any reason for which a
new trial has heretofore been granted in an action at law in federal court.” Fed. R. Civ. P.
59(a)(1)(A).
1. Standard of Review
Rule 59 motions are granted entirely at the discretion of the district court. Blancha
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v. Raymark Indus., 972 F.2d 507, 512 (3d Cir. 1992). The scope of that discretion,
however, is dependent on the basis of the motion. See Klein v. Hollings, 992 F.2d 1285,
1290 (3d Cir. 1992). When the motion is against the weight of the evidence, the court’s
discretion is narrow: it may only grant the motion “when the record shows that the jury’s
verdict resulted in a miscarriage of justice or where the verdict, on the record, cries out to
be overturned or shocks our conscience.” Williamson v. Consol. Rail Corp., 926 F.2d
1344, 1353 (3d Cir. 1991) (citing EEOC v. Del. Dep’t of Health and Soc. Servs., 865 F.2d
1408, 1413 (3d Cir. 1989)). But the court’s discretion is far more broad “when the reason
for interfering with the jury verdict is a ruling on a matter that initially rested within the
discretion of the court, e.g. evidentiary rulings or prejudicial statements made by
counsel.” Klein, 992 F.2d at 1289-90 (internal citations omitted). These cases involve a
two-part inquiry, asking: (1) whether an error was committed; and (2) whether that error
affects a party’s substantial rights. See Fed. R. Civ. P. 61 (“At every stage of the
proceeding, the court must disregard all errors and defects that do not affect any party’s
substantial rights.”); see also, e.g., Abrams v. Lightolier, Inc., 50 F.3d 1204, 1213 (3d Cir.
1995); Bhaya v. Westinghouse Elec. Corp., 709 F. Supp. 600, 601-602 (E.D. Pa. 1989).
In the instant case, Defendants’ Rule 59 motion is based on alleged errors by the court
and prejudicial statements made by Noble’s counsel, and thus the latter standard applies.
If a party fails to object to errors at trial, the right to object in post-trial motions is
waived. See, e.g., Waldorf v. Shuta, 142 F.3d 601, 629 (3d Cir. 1998). Where an
objection has been waived, a court will review it only for plain error. Ryder v.
Westinghouse Elec. Corp., 128 F.3d 128, 136 (3d Cir. 1997); ID Sec. Sys. Can., Inc. v.
Checkpoint Sys., Inc., 249 F. Supp. 2d 622, 671 (E.D. Pa. 2003). “Plain errors are those
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errors that ‘seriously affect the fairness, integrity or public reputation of judicial
proceedings.’” Osei-Afriyie v. Med. Coll. of Pa., 937 F.2d 876, 881 (3d Cir. 1991) (quoting
United States v. Atkinson, 297 U.S. 157, 160 (1936)).
2. Jury Inflammation
Defendants first argue that Noble’s closing argument was prejudicial to the point of
improperly inflaming the jury. Defendants object in particular to Noble’s alleged
“invitations” to the jury to punish Defendants for the fraudulent transfer at issue in the
Georgia litigation. Although Defendants objected in their motions in limine to the
introduction of evidence regarding the findings of fraud made in the Georgia litigation,
they did not object at any point during Noble’s closing argument. The introduction of the
evidence is separate and distinct from the alleged use of prejudicial language during the
closing argument (and Defendants’ objections to the introduction of that evidence will be
addressed below), and thus the objections in the motions in limine do not encompass the
necessary objection during the closing. Therefore, Defendants have waived their
objection and the plain error standard will be applied.
Nothing said by Noble’s counsel during the closing argument affected the fairness,
integrity, or reputation of the proceedings. Defendants object to statements such as,
“[Defendants] didn’t learn their lesson from these prior litigations. They just continued to
abuse the process.” See Trial Tr. vol. 8, 199:8-10, Feb. 9, 2011, ECF No. 298. These
statements are far less prejudicial or inflammatory than those in the cases cited by
Defendants. See Whitehead v. Food Max of Miss., Inc., 163 F.3d 265, 276-78 (5th Cir.
1998) (reversing where counsel ignored judge’s rulings by appealing to local bias and
asked jury to put themselves in victim’s place by imagining how it would feel to have a
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knife in their side); Fineman v. Armstrong World Indus., Inc., 980 F.2d 171, 210 (3d Cir.
1992) (reversing where counsel gave personal opinion on case, insulted opposing
counsel and implied they lied about evidence in order to receive legal fees, and
introduced extrinsic evidence); Commil USA, LLC v. Cisco Sys., Inc., No. 2:07-CV-341,
slip. op. at 3-4 (E.D. Tex. Dec. 29, 2010) (granting motion for new trial where counsel
made references to Jewish witness not eating pork and discussed trial of Jesus as way to
align Christian jurors against Jewish plaintiffs). Further, Defendants’ characterization of
these statements is incorrect–Noble was not asking the jury to punish Defendants for the
prior fraud, but rather reminding the jury that Defendants had attempted to enforce a
license against Noble that Flick did not have the right to transfer. Therefore, Noble’s
statements do not constitute plain error.
3. Admission of Georgia Litigation Evidence
Defendants also claim that it was an error to admit evidence regarding the findings
of fraud from the Georgia litigation, arguing that it was both prejudicial and irrelevant.
The evidence of the Georgia litigation was relevant, however, to the Lanham Act and
product disparagement claims: it served as proof of the invalidity of Argentum’s license to
the ‘153 patent, which in turn served as proof that Defendants made false statements.
This relevance outweighed any possible prejudice to the jury, as required by Federal Rule
of Evidence 403. Therefore, there was no error in the admission of this evidence.
4. Jury Instructions
Defendants argue that the Court erred in not instructing the jury on contract
election, bad faith, and validity. In terms of the contract election instructions, Defendants
argue that instructions on an injured party’s ability to elect to terminate or affirm a
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contract procured by fraud would have helped the jury to understand the Georgia
litigation evidence. But these instructions were inappropriate because, as stated above,
the Georgia evidence only served to show that Defendants had notice of Flick’s lack of
authority to transfer the ‘153 patent rights–and an instruction on contract election was
irrelevant to that issue. Thus, there was no error in failing to instruct on contract election.
Turning to the issue of bad faith, there was no need to instruct the jury on this issue
because, as stated above, the bad faith requirement did not apply to this case as
Defendants had no rights to enforce the patent. Even if the bad faith requirement did
apply here and the failure to instruct was error, the error did not affect Defendants’
substantial rights because the record had ample evidence that Defendants acted in bad
faith, so it is unlikely that the jury would have ruled differently with the inclusion of a bad
faith instruction. Finally, Defendants’ argument that the Court needed to instruct the jury
that patents are presumptively valid fails. The validity of the ‘153 patent was not the
relevant issue; validity is not an element of any of Noble’s claims. Instead, the issue was
whether Defendants had any basis for their right to enforce the patent. Beyond that, the
record contained evidence that Defendants believed the patent was invalid against prior
art, and the PTO later rejected the ‘153 patent. These facts suggest that the Defendants
were not entitled to a presumption of validity. Thus, there was no error in failing to
instruct on validity.
5. Arguments Regarding Claim Construction
Defendants next assert that the Court erred in allowing Noble to make arguments
that its products did not infringe the ‘153 patent. Defendants correctly point out that the
construction of patent claims falls within the realm of the judge, not the jury. See
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Markman v. Westview Instruments, Inc., 517 U.S. 370, 391 (1996). But Defendants
mischaracterize both my conduct and Noble’s arguments. First, Defendants claim that I
denied their in limine motion to bar claims regarding noninfringement, but I granted this
motion and at various points throughout the trial instructed Noble to not make a
noninfringement argument. Trial Tr. vol. 8, 39:7-20. Further, the record demonstrates
that Noble did not argue that their products did not infringe the ‘153 patent. Rather,
Noble’s arguments were based on whether Defendants had a good faith belief that the
‘153 patent disclosed anything. This argument only required the jury to assess
Defendants’ state of mind, not to construe the claim. Because I did not allow Noble to
argue noninfringement, Defendants have failed to show an error in this regard.
6. Conclusion
Defendants fail to demonstrate any errors by the Court that affected the
Defendants’ substantial rights. Therefore, the Motion for a New Trial will be denied.
D. Remittitur
In the alternative to Defendants’ motions for judgment as a matter of law and a
new trial, Defendants seek remittitur (or, if Noble does not accept the remittitur, a new
trial on damages). Remittitur is appropriate only where a verdict is “so large as to shock
the conscience of the court.” Kazan v. Wolinksi, 721 F.2d 911, 914 (3d Cir. 1983). The
decision of whether to remit damages is “within the sound discretion of the trial judge,
‘who is in the best position to evaluate the evidence presented and determine whether or
not the jury has come to a rationally based determination.’” Shesko v. City of Coatsville,
324 F. Supp. 2d 643, 652 (E.D. Pa. 2004) (quoting Spence v. Bd. of Educ., 806 F.2d
1198, 1201 (3d Cir. 1986)).
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1. Compensatory Damages
Defendants’ first argue that the Court should remit the amount of compensatory
damages awarded against Argentum. “Compensatory damages ‘are intended to redress
the concrete loss that the plaintiff has suffered by reason of the defendant’s wrongful
conduct.” State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 416 (2003) (quoting
Cooper Indus., Inc. v. Leatherman Tool Grp., Inc., 532 U.S. 424, 432 (2001)).
Defendants’ argument is without merit. The basis for their complaint is that the
trade show statements did not cause sufficient damage to justify a $1 million jury award
and the jury had no basis on which to grant an award larger than the compensation
suggested by Noble’s expert. Noble’s expert, however, clearly testified that Defendants’
statements were the causal factor in Noble’s reduced sales. Trial Tr. vol. 6, 76:4.
Although the expert only estimated that Noble’s damages amounted to $812,000, the jury
had a basis on which to grant a larger award. The jury could have credited the testimony
of a Noble executive who projected $500,000 in sales for Noble in 2006, while Noble’s
expert only projected $358,000. Trial Tr. 63:23-64:5. The jury could also have used the
figures given by Noble’s expert and estimated damages for 2010. As explicitly stated by
Noble’s expert, any determination of Noble’s lost sales necessarily relies on estimation
and speculation. The $812,000 was not an exact figure of known damages, and thus the
jury was not bound to adhere to it–it had the power to award less or more damages
based on its assessment of the evidence. See, e.g., Larami Corp. v. Amron, No. , 1995
WL 128022, at *15 (E.D. Pa. Mar. 23, 1995) (upholding a jury verdict greater than an
expert’s estimated damages because jury could have reasonably inferred from the
testimony that the expert’s calculations were conservative). The $1 million award is not
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so much greater than the estimate of $812,000 that it shocks the judicial conscience, and
therefore remittitur is not appropriate.
2. Punitive Damages
Defendants additionally challenge the jury’s award of punitive damages in the
amounts of $1 million and $1.25 million against Miller and Silver, respectively. They have
three objections to the award. First, they state again that the jury unconstitutionally
punished Miller and Silver for the fraudulent acts that were the subject of the Georgia
litigation. Second, they argue that punitive damages are unconstitutional because the
jury did not assign any compensatory damages to Miller or Silver. Third, they argue that
Pennsylvania law requires the consideration of a defendants’ wealth, and no such
evidence was presented in this case.
Defendants’ first argument can be dealt with quickly, as it has already been
addressed above. I do not agree with Defendants’ characterization of the verdict as
responding to the Georgia fraud. The Georgia evidence was only introduced in order to
support Noble’s theory that Defendants acted in bad faith in their dealings with Noble.
There is nothing on the record that suggests that the jury did not award the punitive
damages in response to Defendants’ bad faith actions toward Noble.
Turning to Defendants’ second argument, the Due Process Clause requires that a
civil litigant “receive fair notice . . . of the severity of the penalty that a State may impose.”
BMW of N. Amer., Inc. v. Gore, 571 U.S. 559, 574 (1996). The Supreme Court has
identified three “guideposts” that help a court determine whether a punitive damages
award is so excessive as to implicate due process concerns: the degree of
reprehensibility of the defendant’s actions, the disparity between the harm suffered and
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the punitive damages, and the difference between the damages imposed and any civil
penalties authorized. Id. at 514-75. Here, Defendants’ issue relates to the second factor.
They argue that because the jury did not assign any compensatory damages to Miller
and Silver, this means that the two men did not cause any harm to Noble. They therefore
conclude that there is an unconstitutional disparity between this total lack of harm and the
substantial punitive damages award.
Upon a full consideration, however, the jury’s award is constitutionally sound. It is
important to first note that the Supreme Court’s guideposts are just that: guideposts.
There is no brightline rule that a damages award is absolutely unconstitutional in the
absence of a compensatory damages award. In fact, there is precedent for upholding a
punitive damages award against corporate actors where all compensatory damages were
awarded against the corporation itself. See Associated Business Telephone Systems
Corp. v. Greater Capital Corp., 729 F. Supp. 1488, 1508 (D.N.J 1990), aff’d, 919 F.2d
133 (3d Cir. 1990). Further, during deliberations, the jury expressed some confusion as
to how to allocate the compensatory and punitive damages among the parties. This
confusion lends support to Noble’s theory that the compensatory damages award against
Argentum was intended to demonstrate that Argentum and its primary corporate actors,
Miller and Silver, were responsible for the harm done. The jury then may have awarded
punitive damages based on a desire to individually punish Miller and Silver for their
actions taken on behalf of Argentum. Viewing the verdicts in this light, there is no great
disparity: Miller and Silver did $1,000,000 worth of harm and face approximately the
same amount of punitive damages. Therefore, the punitive damages awards do not raise
serious constitutional concerns.
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Defendants’ final argument is that punitive damages cannot stand where no
evidence of the wealth of Miller or Silver was introduced. Defendants cite to Judge
Technical Servs., Inc. v. Clancy, 813 A.2d 879 (Pa. Super. 2002), which states that “[t]he
standard under which punitive damages are measured in Pennsylvania requires analysis
of . . . the wealth of the defendant,” id. at 889 (quoting Kirkbride v. Lisbon Contractors,
Inc., 521 Pa. 97, 101 (1989)). The Pennsylvania Superior Court has since clarified,
however, that “evidence of a tortfeasor’s wealth is not a necessary condition precedent
for imposition of an award of punitive damages.” Vance v. 46 & 2, Inc., 920 A.2d 202,
207 (2007). Thus, the award of damages here cannot be challenged on this ground.
3. Conclusion
Defendants have failed to establish that either the compensatory damage or
punitive damage awards were unsupported by evidence, unconstitutional, or shocking to
the conscience. Therefore, remittitur is not appropriate.
III. Conclusion
For the reasons explained above, Defendants’ Renewed Motion for Judgment as a
Matter of Law and Motion for a New Trial will be denied. An appropriate order follows.
September 23, 2011
Date
/s/ A. Richard Caputo
A. Richard Caputo
United States District Judge
18
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
NOBLE BIOMATERIALS,
CIVIL ACTION NO. 3:08-CV-1305
Plaintiff,
(JUDGE CAPUTO)
v.
ARGENTUM MEDICAL, LLC, THOMAS
MILLER and GREGG SILVER,
Defendants.
ORDER
NOW, this 23rd
day of September, 2011, IT IS HEREBY ORDERED that the
Defendants’ Motion for Judgment as a Matter of Law (Doc. 306) and Defendants’ Motion for
a New Trial (Doc. 308) are DENIED.
/s/ A. Richard Caputo
A. Richard Caputo
United States District Judge
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