Covidien LP v. Esch, Civil Action No. 16-12410-NMG
| Decision Date | 13 December 2019 |
| Docket Number | Civil Action No. 16-12410-NMG |
| Parties | COVIDIEN LP and Covidien Holding Inc., Plaintiffs, v. Brady ESCH, Defendant. |
| Court | U.S. District Court — District of Massachusetts |
Anthony A. Froio, Robert F. Callahan, Jr., Robins, Kaplan, Miller & Ciresi LLP, Boston, MA, Emily E. Niles, Munir R. Meghjee, Patrick M. Arenz, William E. Manske, Robins, Kaplan, Miller & Ciresi LLP, Minneapolis, MN, for Plaintiffs.
Ernest E. Price, Ropers, Majeski, Kohn & Bentley, Los Angelas, CA, Lita M. Verrier, Jonathan C. Hatfield, Ropers, Majeski, Kohn & Bentley, Boston, MA, J. Mark Thacker, Ropers, Majeski, Kohn & Bentley, San Jose, CA, Marie E. Sobieski, Ropers, Majeski, Kohn & Bentley, PC, Redwood City, CA, for Defendant.
The present dispute arises from the outcome of a nine-day jury trial involving the claims of Covidien LP and Covidien Holding Inc. (collectively, "Covidien" or "plaintiff") against Brady Esch ("defendant" or "Esch"), Covidien's former employee. Pending before the Court is the motion of Covidien for entry of judgment, declaratory judgment, other post-trial relief and a permanent injunction (Docket No. 333).
At this late stage of litigation, both the parties and the Court are well acquainted with the facts. As a result, the Court provides only an abbreviated factual summary before proceeding to the merits of the pending post-trial dispute.
Brady Esch, a highly-compensated, global marketing director, began working for Covidien in 2009, when it acquired his employer at the time, VNUS Technologies. In December, 2009, Esch entered into a "Non-Competition, Non-Solicitation, and Confidentiality Agreement" ("the Employment Agreement") with Covidien. Following his termination in 2013, Esch signed a "Separation of Employment Agreement and General Release" ("the Separation Agreement") which reaffirmed certain provisions of the Employment Agreement.
In February, 2014, Esch commissioned the incorporation of Venclose Inc., which was to become a direct competitor to Covidien. One month later, he filed Provisional Patent Application No. 61/970,498 ("the '498 Patent Application") which describes the design, technology and improvement to venous RF ablation devices. In 2015, Esch filed Utility Patent Application No. 14/670,338 ("the '338 Patent Application") and a Foreign PCT Application ("the PCT Patent Application") (collectively, "the Patent Applications").
In January, 2017, this Court issued a preliminary injunction in favor of Covidien enjoining Esch and his agents, etc. from making, developing, manufacturing or selling products that disclose or use any confidential information from Covidien.
In May, 2019, the judicial officer assigned to this session of the Court presided over a nine-day jury trial on Covidien's claims that Esch breached the Employment and Separation Agreements by 1) failing to disclose to Covidien "Inventions" reflected in the Patent Applications, 2) disclosing Covidien's confidential information in the Patent Applications and 3) breaching his covenant of good faith and fair dealing.
The jury returned a verdict for Covidien on its breach of confidentiality claims under the Employment and Separation Agreements and awarded Covidien $794,892.24 in damages. The jury also found, however, that Esch breached neither his obligation to disclose "Inventions" to Covidien nor his covenant of good faith and fair dealing.
A. The Verdict Form
The Verdict Form submitted to the jury posed eight questions (Docket No. 316). Questions 1 and 2, and subparts 1A and 2A, asked the jury whether Esch breached his confidentiality obligations to Covidien under the Employment Agreement and the Separation Agreement, respectively and, if so, whether Covidien had proven damages resulting from such breach. The jury answered Questions 1, 1A, 2 and 2A affirmatively.
Question 3 asked the jury whether Esch breached his obligation to disclose "Inventions" to Covidien under the Employment Agreement and it answered in the negative. Pursuant to the instruction following Question 3, the jury did not answer Question 3A regarding damages for failing to disclose "Inventions" and proceeded to Question 4. The jury answered Question 4 in the negative, i.e., that Esch did not breach the implied covenant of good faith and fair dealing. The jury awarded breach of contract damages to Covidien in response to Question 5 after which there was the following instruction:
If you answer [Question] 3A "YES", proceed to Question 6. Otherwise, your deliberations are complete.
Having not answered Question 3A "Yes", the jury left the remaining questions, Questions 6, 7 and 8, unanswered.
Questions 6, 7 and 8, which were to be considered if the jury answered Question 3A in the affirmative, asked the jury to determine whether Esch took steps to reduce to practice any "Inventions" in the Patent Applications. The failure of the jury to answer those questions forms the substance of the current dispute.
At the Jury Charge Conference, Covidien did not object to the proposed wording of the Verdict Form. On the following morning, before the jury charge, Covidien did, however, file a written objection to the Verdict Form, requesting an alternative structure of the first five questions (Docket No. 311). In that objection, Covidien did not mention Questions 6, 7 and 8 but now argues that its proposed revision to the first five questions would have directed the jury to answer those questions regardless of its previous answers.
Covidien also points out that 1) after the jury charge but before the jury was sent to deliberate, its counsel requested the Court to instruct the jury to answer Questions 6, 7 and 8 regardless of any previous answers and 2) it objected once more after the verdict was returned but before the jury was discharged and requested again that the Court instruct the jury to continue deliberations and to answer Questions 6, 7 and 8.
Covidien seeks the following remedies: 1) entry of judgment on its claims against Esch for breach of confidentiality under the Employment Agreement and the Separation Agreement; 2) declaratory judgment that Esch be required to assign any Invention reflected in the Patent Applications to Covidien; 3) prejudgment interest, post-judgment interest, costs and attorneys' fees; and 4) a permanent injunction barring Esch from continuing to use or disclose Covidien's confidential information.
Esch responds that Covidien's motion is not only procedurally improper but also requests relief to which Covidien is not entitled. Esch does not object to entry of judgment on Covidien's breach of confidentiality claims under both the Employment and Separation Agreements and the corresponding damages awarded by the jury.
Esch claims that Covidien's motion is procedurally improper because it seeks judgment on matters outside the scope of the jury's verdict or, in the alternative, attempts to raise an objection to the Verdict Form that Covidien did not preserve.
With respect to Esch's first argument, Covidien's principal contention is that the question of whether "Inventions" were assigned to it was not addressed by the jury and, in any event, is an equitable question for the Court to decide in the first instance. Esch proffers no citation suggesting that the Court is foreclosed from considering such a claim and, to the extent Covidien seeks declaratory judgment on an equitable question left open by the jury, the Court will entertain it.
Esch next complains that Covidien failed to object timely to the Verdict Form. The "iron clad" rule in this Circuit is that a party waives its right to object to the structure or consistency of a verdict form by failing to object after the verdict is read to the jury and before the jury is discharged. See, e.g. Peckham v. Cont'l Cas. Ins. Co., 895 F.2d 830, 836 (1st Cir. 1990).
At sidebar after the jury charge and the reading of the Verdict Form to the jury and, again, after the jury returned its verdict but before it was discharged, counsel for Covidien requested that the jury be required to answer Questions 6 through 8. The Court explained that the Verdict Form, as submitted, instructed the jury not to answer those questions because it did not answer Question 3A affirmatively. Covidien responded that it viewed Questions 3 and 3A as unrelated to Questions 6 through 8. After reminding counsel that Covidien was in possession of the Verdict Form for more than one day before the charge and that it was the product of deliberation and revision, the Court stated that Covidien's "record is preserved" on the issue of whether the Questions 6 through 8 should have been answered.
Covidien adequately voiced its objection to the instruction which prompted the jury not to answer Questions 6 through 8 under certain circumstances and the Court expressly stated that such an objection was preserved.
Accordingly, Esch's arguments of procedural deficiency are unavailing. Covidien either seeks entry of judgment on an issue unanswered by the jury or objects to the instruction that permitted the jury not to answer Questions 6 through 8. Covidien motion is procedurally sound in either event.
Covidien requests that the Court enter judgment declaring that Esch assigned to Covidien all rights, title and interest in any "Invention" reflected in the Patent Applications.
Esch contends that such a declaration would be inconsistent with the jury's answer to Question 3. By answering Question 3 "No", the jury determined that Esch did not breach his obligation "to disclose ‘Inventions’ to Covidien" under the Employment Agreement. The only logical inference from that response, Esch declares, is that the jury determined that there were no "Inventions" to disclose. As a result, the jury did not...
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