Llc v. Dentsply Int'l Inc. a Del. Bus. Corp.

Decision Date01 July 2010
Docket NumberNo. CIV 08-1101 JB/RLP,CIV 08-1101 JB/RLP
Citation728 F.Supp.2d 1170
PartiesGUIDANCE 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. and Dentsply International, Inc. and Tulsa Dental Products, LLC, Counter Plaintiffs, v. Guidance Endodontics, LLC and Dr. Charles Goodis, Counter Defendants.
CourtU.S. District Court — District of New Mexico

Kyle C. Bisceglie, Renee M. Zaystev, Olshan, Grundman, Frome, Rosenzweig & Wolosky, LLP, New York, NY, and John J. Kelly, Donald A. DeCandia, Ryan Flynn, Modrall, Sperling, Roehl, Harris &Sisk, P.A., Albuquerque, NM, for the Plaintiff and Counterdefendants.

Brian M. Addison, Vice President, Secretary, and General Counsel, Dentsply International, Inc., York, PA, Thomas P. Gulley, Rebecca Avitia, Lewis and Roca, LLP, 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 the Defendants and Counterplaintiffs.

MEMORANDUM OPINION AND ORDER

JAMES O. BROWNING, District Judge.

THIS MATTER comes before the Court on Dentsply/TDP's Motion to Set Aside the UPA Verdict and Enter Judgment as a Matter of Law or Order a New Trial, filed February 10, 2010 (Doc. 503). The Court held a hearing on March 22, 23, and 24, 2010. The primary issues are: (i) whether Defendants Dentsply International, Inc. and Tulsa Dental Products, LLC ("TDP") properly preserved the errors that they allege underlie this motion; (ii) whether Plaintiff Guidance Endodontics, LLC failed to establish an essential element of its claim under the New Mexico Unfair Trade Practices Act, NMSA 1978, §§ 57-12-1 through 57-12-26 ("NMUPA"); (iii) whether Guidance is prohibited from recovering under a particular subsection of the NMUPA because it did not sufficiently alert the Defendants of its intent to pursue a theory under that subsection; and (iv) whether New Mexico law no longer applies to Guidance's NMUPA claim because the Court prohibited Guidance from showing actual damages in relation to that claim. The Court finds that the Defendants adequately preserved this issue for the Court's review. The Court also finds that, notwithstanding that the Court prohibited Guidance from proving actual damages at trial in relation to its NMUPA claim, the harm occurred in New Mexico and that is sufficient to warrant application of New Mexico law under the lex loci delicti doctrine. Because the Court finds that Guidance was allowed to pursue its NMUPA claim under alternative theories, because the Defendants were sufficiently put on notice of the alternative theories, and because Guidance produced sufficient evidence supporting one of its UPA theories, the Court will deny this motion and decline to change the judgment it entered or grant a new trial.

FACTUAL BACKGROUND

This case concerns a suit that Guidance, a small endodontic-equipment company, has brought against the much 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 Guidanceand the Defendants were parties to a Manufacturing and Supply Agreement, which arose as 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. Guidance began selling those endodontic products at extremely 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 allegedly would be in violation of the Supply Agreement. On September 25, 2008, Bill Newell, vice president and general manager of TDP, sent a letter to Goodis that stated, in relevant part:

We have reviewed much of your advertising materials and heard many reports from the field regarding recent activities of Guidance. The purpose of this letter is to advise you that, beyond our tremendous disappointment in your conduct, that you are in default of the Manufacturing and Supply Agreement we entered only recently. The conduct of Guidance is also contrary to the representations you made to us repeatedly during our discussions leading up to the execution of the agreement.
* * * *
Please advise us immediately in writing that you will cease and desist from all of this conduct. Until we receive such confirmation, it is our intention to discontinue the supply of the obturator product.

Letter from Bill Newell to Dr. Charles Goodis (dated September 25, 2008), filed February 24, 2010 (Doc. 508-2, p. 43). On the same day, Brian Addison, vice president, secretary, and general counsel of Dentsply, sent a similar letter to Goodis. That letter stated, in relevant part:

Several activities of Guidance have recently been brought to our attention, including advertising brochures and activities of Guidance representatives in the field. These activities have included statements or representations which are false and/or misleading and therefore actionable under the Lanham Act. These statements include, but are not limited to the following:
- EndoTaper is the best NiTi System in the world
- EndoTaper is extremely flexible and safe
- Endo Files can be used like ProTaper or ProFile GT
- EndoTaper creates the perfect canal shape more effectively and easier than any other file system.
- Now you can treat every case better, quicker and safer with EndoTaper
- OneFil is the best thermal filling obturation system in the world
In order to make such statements you need to have substantiation of such claims.
Please confirm in writing that Guidance will immediately cease and desist from making these statements or immediately provide to me the data that substantiates all of these statements.

Letter from Brian Addison to Dr. Charles Goodis (dated September 25, 2008), filed February 24, 2010 (Doc. 508-2, p. 26).

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. Furthermore, the Defendants allegedly waged an organized campaign to drive Guidance out of business, which included running a marketing campaign that involved 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.

PROCEDURAL BACKGROUND

On November 21, 2008, Guidance filed a Verified Complaint and Demand for Jury Trial. In the Complaint, Guidance made seven claims for relief: (i) breach of contract based on the Defendants' refusal to supply obturators, see Complaint ¶¶ 158-68, at 30-31; (ii) breach of contract based on the Defendants' refusal to supply endodontic files, see Complaint ¶¶ 169-79, at 31-32; (iii) breach of the implied covenant of good faith and fair dealing, see Complaint ¶¶ 180-87, at 32-33; (iv) violation of the Delaware Deceptive Trade Practices Act, see Complaint ¶¶ 188-97, at 33-34; (v) violation of the NMUPA, see Complaint ¶¶ 198-207, at 34-35; (vi) violation of § 43(a)(1)(B) of the Lanham Act, see Complaint ¶¶ 208-16, at 35-36; and (vii) tortious interference with existing and prospective contractual relations, see Complaint ¶¶ 217-26, at 36-37. On the way to trial, the Court dismissed several of these claims.

1. The Jury's Verdict and the Court's Judgment.

The Court held a three-week jury trial from September 21, 2009 through October 9, 2009. See Clerk's Minutes Before the Honorable James O. Browning at 1, filed September 21, 2009 (Doc. 439). On Wednesday, October 7, 2009, the Court read the instructions to the jury. See id. at 40. Those instructions included Guidance's claims for breach of contract, breach of the implied covenant of good faith and fair dealing, violation of the NMUPA, and violation of the Lanham Act. See Court's Final Jury Instructions (Given), Instruction No. 18, at 18, filed October 8, 2009 (Doc. 430). The Court had dismissed the other claims before trial.

The jury deliberated for approximately two days. On October 9, 2009, the jury returned a verdict largely in favor of Guidance. The jury found that the Defendants breached the Supply Agreement with regard to its failure to supply obturators and its failure to produce the V2 file, and found that breach caused Guidance damages. See Verdict Form ¶¶ 2-4, at 2, filed October 9, 2009 (Doc. 441). The jury also found that the Defendants breached the implied covenant of good faith and fair dealing and violated the NMUPA, and found that both infractions caused damages to Guidance. See id. ¶¶ 5-12, at 2-3. The jury awarded Guidance $500,000.00 in compensatory damages for past harm caused by the breach of contract related to the V2, and $3,580,000.00 in future damages related to that breach. See VerdictForm ¶¶ 15-16, at 4. The jury also found that Guidance was entitled to nominal damages of $200,000.00 for the Defendants' unlawful conduct. See Verdict Form ¶¶ 17-21, at 4-5. 2 Finally, based on the breach of the implied covenant and violation of the NMUPA, the jury awarded Guidance punitive damages of $40,000,000.00. See Verdict Form ¶¶ 22-23, at 5-6.

The jury did not, however, completely absolve Guidance of fault. It found that Guidance breached the...

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