Massachusetts Eye and Ear Infirmary v. Qlt, Inc.

• Decision Date: 10 July 2007
• Docket Number: No. CIV.A.00 10783 WGY.,CIV.A.00 10783 WGY.
• Citation: 495 F.Supp.2d 188
• Parties: MASSACHUSETTS EYE AND EAR INFIRMARY Plaintiff, v. QLT, INC., Defendant.
• Court: U.S. District Court — District of Massachusetts

Page 188

495 F.Supp.2d 188

MASSACHUSETTS EYE AND EAR INFIRMARYPlaintiff, v.QLT, INC., Defendant.

No. CIV.A.00 10783 WGY.

United States District Court, D. Massachusetts.

July 10, 2007.

COPYRIGHT MATERIAL OMITTED

Lee Carl Bromberg, Bromberg & Sunstein LLP, Boston, MA, for Lee Carl Bromberg, Special Master.

Paul A. Ainsworth, Covington & Burling LLP, Washington, DC, Sarah E. Cooleybeck, Denise W. DeFranco, Barbara A. Fiacco, Dean Richlin, Gabriel M. Helmer, Foley Hoag LLP, Boston, MA, Donald R. Ware, Roderick R. McKelvie, Richard L. Rainey, Donald J. Ridings, Covington & Burling LLP, Washington, DC, Miriam L. Pogach, Philadelphia, PA, for QLT Phototherapeutics, Inc., Defendant.

Paul G. Cushing, Partners HealthCare System, Inc., Office of the General Counsel, Boston, MA, for Ph.D. Tayyaba Hasan, Interested Party.

Juliet A. Davidson, Todd & Weld, Boston, for Novartis Opthalmics, Interested Party.

John J. Cotter, Kirkpatrick & Lockhart Preston Gates Ellis LLP — MA, Boston, MA, William H. Baker, David S. Chun, Brian P. Biddinger, James F. Haley, Jr., Christopher J. Harnett, Kenneth B. Herman, Ropes & Gray LLP, New York, NY, Bindu Donovan, Fish & Neave LLP, New York, NY, Gerald J. Flattmann, Kirkland & Ellis, New York, NY, Duncan A. Greenhalgh, Testa, Hurwitz & Thibeault, LLP, Boston, MA, J. Patrick Kennedy, Bulkley, Richardson & Gelinas LLP, Boston, MA, Douglas J. Kline, Testa, Hurwitz & Thibeault, LLP, Boston, MA, Timothy P. Linkkila, Cambridge, MA, Karen Mangasarian, Fish & Neave IP Group, New York, NY, Erica B. Abate Recht, Birnbaum & Godkin, Boston, MA, Christine M. Roach, Roach & Carpenter, P.C., Boston, MA, Krista M. Rycroft, Kaye Scholer LLP(N.Y.), New York, NY, Carla E. Sereny, Ropes & Gray LLP, New York, NY, for Massachusetts Eye and Ear Infirmary, Counter Defendant.

Thomas F. Maffei, Griesinger, Tighe & Maffei, LLP, Boston, MA, for The General Hospital Corporation, Movant.

MEMORANDUM AND ORDER

YOUNG, District Judge.

I.INTRODUCTION

This lawsuit is the result of failed business negotiations for a royalty on the net sales of Visudyne, a blockbuster drug prescribed to treat age-related macular degeneration.In the early to mid-1990s, researchers at Massachusetts Eye and Ear Infirmary ("MEEI") demonstrated that the drug had promise in treating age-related macular degeneration, a leading cause of blindness.QLT, Inc.("QLT") owns the compositional patent to the drug.QLT promised MEEI that it would negotiate for the licensing rights to the medical procedure.After the parties were unable to reach agreement, this lawsuit followed.

Over QLT's objections, this case was tried to a jury on the claims of unjust enrichment and violation of Massachusetts General Laws, chapter 93A.The trial, which lasted three weeks, was ably handled by both parties.The jury displayed an extraordinary grasp of the complex facts surrounding the development of Visudyne, asking questions that cut to the core.After two days of deliberation, the jury returned a verdict for MEEI.QLT then filed a motion for judgment notwithstanding the verdict, contending that, in federal court, the jury could only serve in an advisory capacity.To decide this central issue, this Court must wade through the murky waters of Seventh Amendment jurisprudence and a dense thicket of First Circuit precedent.

II.PROCEDURAL POSTURE

MEEI filed the instant action on April 24, 2000.MEEI alleged breach of contract, breach of implied contract, breach of the covenant of good faith and fair dealing, conversion, misrepresentation, unjust enrichment, misappropriation of trade secrets, and violation of chapter 93A.The district court granted summary judgment for QLT on all counts.On appeal, the First Circuit affirmed in part and reversed in part.The First Circuit held that MEEI could proceed on the theories of unjust enrichment, misappropriation of trade secrets, and violation of chapter 93A.Massachusetts Eye and Ear Infirmary v. QLT Phototherapeutics, Inc.(MEEI I), 412 F.3d 215(1st Cir.2005).

On remand, the case was assigned to this session of the Court.QLT twice moved for summary judgment on the trade secrets claim.This Court denied summary judgment, though it narrowed that claim to the alleged disclosure of MEEI's trade secrets by QLT on three specific dates.This Court empaneled a jury over QLT's objections that MEEI had no right to trial by jury on the unjust enrichment and chapter 93A claims.Trial commenced on October 16, 2006.After MEEI presented its case, QLT moved for a directed verdict.This Court granted the motion with respect to the trade secrets claim.QLT then presented its defense to the unjust enrichment and chapter 93A claims.On November 8, 2006, the jury returned a verdict for MEEI on the unjust enrichment and chapter 93A claims.

Subsequently, QLT filed a motion for judgment notwithstanding the verdict.QLT contended, among other things, that the jury could serve in no more than an advisory capacity.This Court heard the motion on December 20, 2006 and took the matter under advisement.The Court invited the parties to submit proposed findings of fact in the event that the Court ruled that the jury had served in an advisory capacity only.MEEI and QLT requested until March 20, 2007 to submit the appropriate documents and then timely complied.Now, having fully considering the briefs and the record, this Court is prepared to rule.

III.DISCUSSION

A.The Right to Trial by Jury

In a diversity action, the right to a jury trial is matter of federal law.Simler v. Conner,372 U.S. 221, 222, 83 S.Ct. 609, 9 L.Ed.2d 691(1963).When analyzing the right to a jury, the federal court"must look first to state law to determine the elements of the cause of action and the propriety of the remedies sought."Gallagher v. Wilton Enters., Inc.,962 F.2d 120, 122(1st Cir.1992).Once this is done, "the court should turn to federal law to `characterize' the action and remedies as either legal or equitable."Id.The Supreme Court has delineated a two-part test to distinguish between legal and equitable rights:

First, we compare the statutory action to the 18th-century actions brought in the courts of England prior to the merger of the courts of law and equity.Second, we examine the remedy sought and determine whether it is legal or equitable in nature.The second inquiry is the more important in our analysis.

Chauffeurs, Teamsters and Helpers, Local No. 391 v. Terry,494 U.S. 558, 565, 110 S.Ct. 1339, 108 L.Ed.2d 519(1990)(citations omitted).

Determining "which actions belong[] to law and which to equity for the purpose of delimiting the jury trial right continues to be one of the most perplexing questions of trial administration."Wright & Miller, 9 Federal Practice and Procedure: Civil2d § 2302.This Court must here undertake that inquiry because MEEI contends that it has a right to trial by jury on both the unjust enrichment and chapter 93A claims.

1.Unjust Enrichment

The First Circuit has never squarely decided whether there is a right to a jury on a theory of unjust enrichment.Instead, different panels of that court merely assumed both that it was proper to try the unjust enrichment claim to a jury, see, e.g., Jelmoli Holding, Inc. v. Raymond James Fin. Servs., Inc.,470 F.3d 14(1st Cir.2006), or to the bench, see, e.g., Levin v. Dalva Bros., Inc.,459 F.3d 68(1st Cir.2006).The only case squarely on point is a decision from the District of New Hampshire holding that there is no right to a jury on an unjust enrichment claim because New Hampshire courts traditionally have understood unjust enrichment as an equitable claim and restitution is an equitable form of monetary relief.Almaz v. Temple-Inland Forest Prods. Corp.,No. Civ. 97-374-JM, 2000 WL 36938(D.N.H.Nov.22, 1999).

Despite the lack of controlling precedent, the First Circuit appears to have provided sufficiently definitive guidance to resolve this matter.As described, the First Circuit's holding in Gallagher v. Wilton Enters., Inc. directs the court to begin the inquiry by determining the elements of the state law claim in question.962 F.2d at 122.Under Massachusetts law, unjust enrichment has the familiar requirement that one party be unjustly enriched and the other party suffer an unjust detriment.Massachusetts law has, however, an additional requirement for unjust enrichment.Massachusetts courts have repeatedly held that when there is an adequate remedy at law, there can be no unjust enrichment.In Santagate v. Tower,64 Mass.App.Ct. 324, 833 N.E.2d 171(2005), the Appeals Court stated that "[a]n equitable remedy for unjust enrichment is not available to a party with an adequate remedy at law."Id. at 329, 833 N.E.2d 171;see also, e.g.Fox v. F & J Gattozzi Corp.,41 Mass.App. Ct. 581, 589, 672 N.E.2d 547(1996)(unjust enrichment claim duplicative when plaintiff had prevailed on breach of contract claim);Popponesset Beach Ass'n, Inc. v. Marchillo,39 Mass.App.Ct. 586, 593, 658 N.E.2d 983(1996)(declining to reach the unjust enrichment theory because plaintiff had suitable remedy at law).In the District of Massachusetts, Judge Tauro, Judge Stearns, as well as this session of the Court, have all invoked this principle in disposing of unjust enrichment claims.See, e.g., In re Lupron Mktg. and Sales Practices Litig.,295 F.Supp.2d 148, 182(D.Mass.2003)(Stearns, J.);One Wheeler Road Assocs. v. Foxboro Co.,843 F.Supp. 792, 799(D.Mass.1994);Ben Elfman & Son, Inc. v. Criterion Mills, Inc.,774 F.Supp. 683, 687(D.Mass.1991)(Tauro, J.).

Although federal law, and not state law, determines whether a claim is legal or equitable in nature, Massachusetts' requirement that there be no available legal remedy expressly marks unjust enrichment as an equitable remedy.Consequently, there is no Seventh Amendment right to a jury solely on the basis of that claim.

2.Chapter 93A

Under chapter 93A, "unfair or deceptive acts or practices in the conduct of...