Guidance Endodontics Llc v. Dentsply Int'l Inc.
| Decision Date | 03 August 2010 |
| Docket Number | No. CIV 08–1101 JB/RLP.,CIV 08–1101 JB/RLP. |
| Parties | GUIDANCE ENDODONTICS, LLC, a New Mexico Limited Liability Company, Plaintiff,v.DENTSPLY INTERNATIONAL, INC., a Delaware Business Corporation, and Tulsa Dental Products, LLC, a Delaware Limited Liability Company, Defendants,andDentsply International, Inc. and Tulsa Dental Products, LLC, Counter Plaintiffs,v.Guidance Endodontics, LLC and Dr. Charles Goodis, Counter Defendants. |
| Court | U.S. District Court — District of New Mexico |
OPINION TEXT STARTS HERE
Kyle C. Bisceglie, Renee M. Zaystev, Olshan, Grundman, Frome, Rosenzweig & Wolosky, LLP, New York, NY, John J. Kelly, Donald A. DeCandia, Ryan Flynn, Modrall, Sperling, Roehl, Harris & Sisk, P.A., Albuquerque, NM, for Plaintiff and Counterdefendants.Brian M. Addison, Vice President, Secretary, and General Counsel, Dentsply International, Inc., York, PA, Thomas P. Gulley, Rebecca Avitia, Bannerman & Johnson, PA, Albuquerque, NM, R. Ted Cruz, Morgan Lewis & Bockius, LLP, Houston, TX, Howard M. Radzely, W. Brad Nes, Morgan Lewis & Bockius, LLP, Washington, D.C., for Defendants and Counterplaintiffs.
THIS MATTER comes before the Court on Dentsply/TDP's Motion for a New Trial Due to Guidance's Prejudicial Mid–Trial Switch in Position on Whether the V2 is a “New Product” and Error in Jury Instruction 21, filed February 10, 2010 (Doc. 502). The Court held a hearing on March 22, 2010 through March 24, 2010. The primary issues are: (i) whether Plaintiff Guidance Endodontics, LLC changed its litigation position mid-trial, to the prejudice of Defendants Dentsply International, Inc. (“Dentsply”) and Tulsa Dental Products, LLC (“TDP”); (ii) whether the doctrine of judicial estoppel prohibited Guidance from changing its position regarding the correct interpretation of the parties' Manufacturing and Supply Agreement; (iii) whether the Court erred in one of the jury instructions; (iv) whether the Defendants preserved the above errors for post-trial review; and (v) whether the Court's errors, if any, warrant granting the Defendants a new trial on Guidance's breach-of-contract claim. Because the Court finds that any surprise to the Defendants could not have been prejudicial, and because the Court determines that there was no error in Instruction 21, the Court denies the motion.
The suit is a contract dispute that Guidance, a small endodontic-equipment company, brought against the larger Defendants, who were both Guidance's rivals and its suppliers. More background on the lawsuit is set forth in one of the Court's earlier opinions. See Guidance Endodontics, LLC v. Dentsply Int'l, Inc., 633 F.Supp.2d 1257, 1260–67 (D.N.M.2008) (Browning, J.). The Defendants are manufacturers and suppliers of a variety of dental/endodontic products that compete with Guidance's products, including endodontic obturators, files, and ovens.1 Guidance and the Defendants were parties to a Manufacturing and Supply Agreement, which arose out of a settlement of a separate intellectual-property dispute. The Supply Agreement required the Defendants to supply Guidance with endodontic files, obturators, and ovens, which Guidance would then sell to end-users.2
Guidance began selling those endodontic products at low prices compared to the prices that the Defendants charged for the same or similar products. Allegedly as a dirty business tactic to keep Guidance from underselling them in the marketplace, the Defendants stopped supplying endodontic obturators to Guidance. The Defendants told Guidance that they were ceasing to supply obturators because they heard that Guidance was telling its customers and potential customers that the Defendants manufactured the products, which, they alleged, would be in violation of the Supply Agreement. In addition to ceasing to supply obturators, the Defendants refused to manufacture a new endodontic file—the V2 file—which Guidance was intending to sell.3 The Defendants contended that the Supply Agreement required Guidance to supply them with detailed engineering drawings before they were obligated to supply the V2 file. Guidance disputes that the Supply Agreement requires them to provide engineering drawings as a prerequisite to the Defendants producing the V2. Finally, the Defendants waged an organized marketing campaign to drive Guidance out of business, which included sales staff falsely representing to actual and potential Guidance customers that Guidance was no longer able to supply endodontic files. Based on these three categories of conduct, Guidance filed this suit.
Article 4.5 of the Supply Agreement governs new products: Doc. 2.1 ¶ 4.5, at 6. Exhibit 1 to the Supply Agreement can be separated into and referenced by two distinct sections. The first part of Exhibit 1—located at page 24 of 43 in the CM/ECF pagination—purports to be a list of the initial Guidance Products in development at the time that the parties executed the Supply Agreement. See Doc. 2–1, at 24. The first paragraph of the first part of Exhibit 1 states:
The following is a list of products/specifications for the Guidance Products. Guidance from time to time may make minor changes (not to exceed 3 minor changes per year utilizing stock materials and/or processes validated on existing production equipment and complete with engineering drawings detailing product specs and tolerances) to the .04 and .06 taper files by changing the tip, number of flutes, and color of stopper on the files, provided that in any event, TDP shall not be required to make any prototypes for any such changes and TDP would have 120 days from the request to implement the changes on prospectively produced products. Any dissatisfaction of Guidance with such changed files shall be at its risk and shall not constitute the basis for a claim of a non-conforming product.
Doc. 2–1, at 24 (bold in original). Like Article 4.5, the second part of Exhibit 1 to the Supply Agreement also addresses new products. The first paragraph of that second part states:
The following is a list of possible products that Guidance may desire for Dentsply Tulsa to manufacture. These products are subject to Paragraph 4.5 of the Agreement. In addition, Guidance agrees that none of the following additional products will be prototyped for a period of eighteen months after the Effective Date of the Agreement and, in the case of niti instruments, no more than two rounds of prototypes of any instrument will be provided by Dentsply. If additional prototypes are requested, Guidance will be charged a fee for each round of prototypes. All requests for prototypes under this agreement must be submitted with engineering drawing(s) complete with product specs and tolerances.
Doc. 2–1, at 25 (bold in original).
On November 21, 2008, Guidance filed a Complaint in federal district court asserting several causes of action against the Defendants, including breach of contract. See Complaint ¶¶ 158–187, at 30–33. At that time, Guidance referred to the V2 file as a “new Guidance product[.]” Complaint ¶ 171, at 31. Guidance also expressed a belief that Article 4.5 of the Supply Agreement applied to the production of the V2 file, as demonstrated by Guidance alleging that the Defendants breached Article 4.5 by demanding engineering drawings before they would produce the V2. See Complaint ¶¶ 169–179, at 31–32.
The position that Article 4.5 applied to the V2 was more clearly stated in Guidance's Memorandum in Support of Application for Temporary Restraining Order, filed November 21, 2008 (Doc. 4)(“TRO App. Memo.”). In that memorandum, Guidance stated:
Pursuant to Article 4.5 of the Supply Agreement, if Guidance desired to manufacture new products it was to submit “product specifications” to defendant TDP for such products. (Compl. ¶ 91). On or about September 2, 2008, Guidance submitted such “product specifications” and a prototype acceptable to Guidance was developed at the Plant. (Compl. ¶¶ 92, 102).
TRO App. Memo. at 11 (emphasis added). Guidance filed a declaration by Goodis in support of the TRO application. See Declaration of Charles J. Goodis in Support of Plaintiff's Application for Temporary Restraining Order (executed Nov. 21, 2008), filed November 21, 2008 (Doc. 5)(“Goodis Decl.”). In his declaration, Goodis refers to the V2 as a “new File,” Goodis Decl. ¶ 8, at 2, and a “next-generation file[ ],” id. ¶ 27, at 6.
At the TRO hearing, on November 25, 2008, Thomas Gulley, the Defendants' attorney, stated the Defendants' belief that the first part of Exhibit 1 governed the production of the V2:
MR. GULLEY: ... The first page of Exhibit 1 ... at the top in the bold print there is itemization there of what is required for products that have minor changes to them. My clients believe that this V2–Taper product is a change to the EndoTaper that my clients have been making, and the important part of this bolded print is that it begins in the fourth line there that these changes must come complete with engineering drawings, detailing product specs and tolerances.
Transcript of Hearing at 8:16–9:1 (taken Nov. 25, 2008), filed December 9, 2008 (Doc. 25)(“Nov. 25 Tr.”)(Gulley). At that same hearing, in response to cross-examination by Mr. Gulley, Goodis testified that the first part of Exhibit 1 applied to the V2 file:
Q. If you would, look at the first page of—Well, take a look at Exhibit 1. In order to have Dentsply produce the V2 for you, where would that be covered on Exhibit 1?
A. Are you asking throughout the document, or does it state the V2?
Q. No. I'm just asking on Exhibit 1. Where does the V2 come in?
* * * *
A. It was not specified by name as a V2.... It's under...
To continue reading
Request your trial