Morris v. Scenera Research, LLC

• Citation: 788 S.E.2d 154,368 N.C. 857
• Decision Date: 10 June 2016
• Docket Number: No. 429PA13,429PA13
• Court: United States State Supreme Court of North Carolina
• Parties: Robert Paul MORRIS v. SCENERA RESEARCH, LLC and Ryan C. Fry

368 N.C. 857
788 S.E.2d 154

Robert Paul MORRIS
v.
SCENERA RESEARCH, LLC and Ryan C. Fry

No. 429PA13

Supreme Court of North Carolina.

Filed June 10, 2016

Young Moore and Henderson P.A., Raleigh, by Walter E. Brock, Jr., Andrew P. Flynt, and Patrick M. Aul, for plaintiff-appellee/appellant.

Parker Poe Adams & Bernstein LLP, Raleigh, by Catharine B. Arrowood, Scott E. Bayzle, and Catherine R.L. Lawson, for defendant-appellants/appellees.

Smith Moore Leatherwood LLP, by Richard A. Coughlin, Greensboro, and Matthew Nis Leerberg, Raleigh, for North Carolina Chamber of Commerce, North Carolina Association of Defense Attorneys, and North Carolina State University, amici curiae.

Robinson, Bradshaw & Hinson, P.A., Charlotte, by John R. Wester and Thomas Holderness, for Qualcomm Incorporated, Qualcomm Technologies, Incorporated, Cisco Systems, Inc., Microsoft Corp., and Cree, Inc., amici curiae.

BEASLEY, Justice.

368 N.C. 859

This appeal arises out of a compensation and intellectual property dispute between Robert Paul Morris ("plaintiff") and his former employer Scenera Research, LLC and its CEO Ryan Fry (collectively, "defendants"). In 2004, Stanley Fry, defendant Ryan Fry's father, hired plaintiff as Scenera's first employee. The parties did not sign a written employment agreement. They did, however, have several discussions concerning the details of plaintiff's employment. Plaintiff expressed interest in inventing, but testified at trial that he had no obligation to invent. According to plaintiff, inventing was not part of his regular job duties for which he received a base salary.

Plaintiff participated in Scenera's patent bonus program (the "bonus program"), under which he received $5000 for every patent application submitted to the United States Patent and Trademark Office ("PTO") and another $5000 if and when the patent issued. Defendant Ryan Fry became concerned with the bonus program's viability and suspended Scenera's bonus program for all employees effective 1 January 2008. Plaintiff testified that Scenera owed him $210,000 in patent bonuses at this time. Plaintiff voluntarily suspended receipt of payments beginning in January 2008, believing that defendant Fry had promised to reinstate the original bonus program if Scenera did not create a new compensation plan and, thereafter, provide plaintiff a written employment contract.

As of 2009, the parties had not been able to agree on a new compensation plan and plaintiff still had no written contract. Frustrated with this lack of progress, plaintiff hired a lawyer and threatened to sue under the North Carolina Wage and Hour Act ("WHA") for the $210,000 in bonuses owed. The parties dispute the events that followed.

788 S.E.2d 157

Plaintiff claimed that Scenera fired him in retaliation for his threatening to bring a lawsuit, thereby violating the North Carolina Retaliatory Employment Discrimination Act ("REDA"). Defendants countered that plaintiff

368 N.C. 860

clearly intended to leave the company and that his lawyer indicated the only option was to negotiate a severance package—thus, plaintiff "effectively resigned" and defendants merely accepted the resignation. Defendants tendered plaintiff a check for $210,000 on the condition that he acknowledge Scenera's ownership of patent applications filed and patents issued between 1 January 2008 and 17 June 2009. Plaintiff did not accept defendants' offer.

Plaintiff filed a complaint against defendants alleging breach of contract, fraudulent inducement, unjust enrichment, and WHA and REDA violations. On 1 April 2011, the Chief Justice designated this action as a complex business case and assigned it to the North Carolina Business Court. Defendants asserted a counterclaim for declaratory judgment that (1) Scenera owns all inventions plaintiff developed during his employment, and (2) plaintiff was not entitled to bonuses for patent applications filed or patents issued any time after January 2008. Defendants also sought damages for breach of fiduciary duty and for plaintiff's failure to support prosecution of patent applications to the PTO.

Both parties moved for summary judgment. The trial court granted defendants' motion in part, concluding that plaintiff was "hired to invent," and that ownership of the patents presumptively rested with Scenera, with the onus on plaintiff to prove that an agreement between the parties vested ownership with him. The trial court also granted defendants' summary judgment on plaintiff's claims for fraudulent inducement and unjust enrichment. The trial court denied the remainder of plaintiff's and defendants' motions for summary judgment.

Trial began on 30 January 2012. At the close of the evidence, the trial court granted defendants' motion for a directed verdict with respect to the issue of patent ownership, but denied defendants' motion for a directed verdict on the WHA and REDA claims. The trial court submitted the rest of the issues to the jury, and the jury awarded plaintiff (1) $210,000 in patent bonuses under the WHA for applications filed or patents issued between 1 January 2008 and 17 June 2009, (2) $675,000 under the WHA in patent issuance bonuses for patent applications pending as of 17 June 2009, (3) and $390,000 for REDA violations.

Plaintiff then requested liquidated damages and attorneys' fees under the WHA, and treble damages and attorneys' fees under REDA. The trial court denied plaintiff's request to treble damages, awarded $450,000 in attorneys' fees, and awarded $210,000 in liquidated damages for patents that have already issued. The trial court denied plaintiff's request for liquidated damages under the WHA for patents that had not yet issued. The trial court further ruled that Scenera owned all of the inventions,

368 N.C. 861

patents, and patent applications listed in plaintiff's complaint, required plaintiff to assign any unassigned patent applications to Scenera, and ruled that Scenera could not recover damages under its counterclaims. Defendants moved for judgment notwithstanding the verdict (JNOV), and the trial court denied the motion. All parties appealed.

The Court of Appeals affirmed the trial court's ruling on the motions for directed verdict and JNOV, liquidated damages, WHA damages, and REDA damages. The court reversed, however, the trial court's ruling that plaintiff could not pursue rescission. Morris v. Scenera Research LLC , 229 N.C.App. 31, 747 S.E.2d 362 (2013). All parties appealed.

I

A

Defendants contend that the trial court should have granted their motions for directed verdict and JNOV as to whether plaintiff was entitled to patent issuance bonuses for patents still pending when his employment with Scenera ended. To survive a motion for directed verdict or JNOV, the non-movant must present "more than a scintilla of evidence" to support its claim. Stark v. Ford Motor Co. , 365 N.C. 468, 480, 723 S.E.2d 753, 761 (2012) (citation omitted).

788 S.E.2d 158

While a scintilla is "very slight evidence," State v. Hawkins , 155 N.C. 466, 470, 71 S.E. 326, 328 (1911) (quoting State v. White , 89 N.C. 462, 464–65 (1883) ), the non-movant's evidence must still "do more than raise a suspicion, conjecture, guess, surmise, or speculation as to the pertinent facts in order to justify its submission to the jury," Jenrette Transp. Co. v. Atl. Fire Ins. Co. , 236 N.C. 534, 539, 73 S.E.2d 481, 485 (1952) (citation omitted). The trial court must construe the evidence in the light most favorable to the non-movant and resolve all evidentiary conflicts in the non-movant's favor. Smith v. Price , 315 N.C. 523, 527, 340 S.E.2d 408, 411 (1986) (citations omitted). We review this question of law de novo. Green v. Freeman , 367 N.C. 136, 141, 749 S.E.2d 262, 267 (2013) (citations omitted).

The WHA provides:

Employees whose employment is discontinued for any reason shall be paid all wages due on or before the next regular payday either through the regular pay channels or by mail if requested by the employee. Wages based on bonuses, commissions or other forms of calculation shall be paid on the first regular payday after the amount becomes calculable when a separation occurs.

N.C.G.S. § 95–25.7 (2015).

368 N.C. 862

At trial, plaintiff testified that he, like other Scenera employees, had a unique bonus plan, and that he was never informed that continued employment with Scenera was a prerequisite for receiving patent issuance bonuses. Plaintiff confirmed in his testimony that "the issuance bonus ... was earned at the time the patent application was filed." He further testified that after a patent was filed and he assigned the corresponding rights to Scenera, "I was entitled to $5,000.... There was nothing as far as work with respect to the patent that I needed to do in order to earn that bonus." Moreover, Mona Singh, an inventor and witness for Scenera, confirmed that "whatever bonuses applied to [her] agreement became earned and due at the time the patent was filed." Singh also testified that she had received five or six issuance bonuses after leaving...