Muncey v. Eyeglass World, LLC

• Decision Date: 29 August 2012
• Docket Number: No. 29,813.,29,813.
• Citation: 289 P.3d 1255,2012 NMCA 120
• Parties: Willis S. MUNCEY, Plaintiff–Appellee, v. EYEGLASS WORLD, LLC, Defendant–Appellant.
• Court: Court of Appeals of New Mexico

289 P.3d 1255

2012 NMCA 120

Willis S. MUNCEY, Plaintiff–Appellee,

v.EYEGLASS WORLD, LLC, Defendant–Appellant.

No. 29,813.

Court of Appeals of New Mexico.

Aug. 29, 2012.

Certiorari Denied, Nov. 1, 2012, No. 33,842.

Bauman, Dow & León, P.C., Christopher P. Bauman, Alberto A. León, Brian G. Grayson, Rose Bryan, P.C., Rose Bryan, Albuquerque, NM, for Appellee.

Modrall, Sperling, Roehl, Harris & Sisk, P.A., Emil J. Kiehne, Albuquerque, NM, Reed Smith LLP, Raymond A. Cardozo, San Francisco, CA, for Appellant.

OPINION

SUTIN

, Judge.

{1} A jury awarded Dr. Willis Muncey compensatory and punitive damages against Eyeglass World, LLC, totaling $2,300,002 for breach of contract and for a tort claim based upon conversion of his patient files. Eyeglass World primarily attacks the verdict on grounds of lack of substantial evidence and excessive punitive damages. Eyeglass World also asserts that the Copyright Act, 17 U.S.C. § 301(a) (1998)

, preempted the district court from having subject matter jurisdiction. We hold that the district court properly exercised subject matter jurisdiction in this case. We further hold that the evidence and applicable law support the damages awards.

BACKGROUND

{2} Eyeglass World provides optical products and services at retail stores. In conjunction with its optical business, Eyeglass World leases an adjoining portion of its retail space to a contract optometrist who is available to examine patients on-site and provide prescriptions to patients for eyeglasses or contacts that can be prepared on-site. The optometrist is recognized as an independent contractor; all other personnel are Eyeglass World employees that work in both on-site businesses within the store. Dr. Muncey was an optometrist at one of Eyeglass World's stores.

{3} Over a period of several months in 2005, Eyeglass World and Dr. Muncey held negotiations in regard to the termination of their contractual relationship. Disputes followed regarding whether Eyeglass World had agreed to buy out Dr. Muncey's remaining contract or whether it had agreed to purchase his patient files, and also regarding whether the negotiations were successful in reaching a final binding agreement. Dr. Muncey believed that he and Eyeglass World had created a binding agreement for the purchase of Dr. Muncey's practice and his patient files for $300,000. When Eyeglass World never implemented what Dr. Muncey believed was the agreement, Dr. Muncey filed suit for breach of contract. The parties then again entered into negotiations and, effective July 31, 2006, signed three contracts: (1) a Termination Agreement, under which Dr. Muncey agreed to dismiss his pending lawsuit and the parties terminated their previous written contract and any oral agreement; (2) a Professional Services Agreement; and (3) a Lease Agreement that contained a new revenue sharing arrangement and space leased to Dr. Muncey (the lease agreement). The lease agreement also provided that Dr. Muncey was to “maintain full and independent responsibility and control over all files and records relating to [his] patients[.]”

{4} Soon afterward, Dr. Muncey asserted that Eyeglass World failed to implement and comply with the terms of the lease agreement. As a result, he refused to dismiss his pending breach of contract lawsuit and emailed Eyeglass World to complain that the lease agreement was void because Eyeglass World never fully implemented it. Eyeglass World responded that the lease agreement was not void, although it had yet to fully implement that agreement. Eyeglass World continued paying Dr. Muncey the per diem payable under his former contract and did not pay Dr. Muncey based on the revenue-sharing provision set out in the lease agreement. The parties' relationship continued to deteriorate and Dr. Muncey informed Eyeglass World that he was terminating their relationship and vacating the premises effective April 20, 2007.

{5} An April 17, 2007, letter from Dr. Muncey's attorney to Eyeglass World's attorney stated that, “[a]s a gesture of goodwill, Dr. Muncey will attempt to provide doctor coverage from now through the end of May[ ] 2007 [,] in order to give [Eyeglass] World sufficient time to find his replacement.” The letter did not mention patient files. Dr. Muncey explained at trial that when he stopped working at Eyeglass World he left his patient files at Eyeglass World so that replacement optometrists would have access to the files until his coverage duties at Eyeglass World ended on May 30, 2007. Dr. Muncey also stated at trial that the files were voluminous and that he was trying to develop a way to house them and easily access them for his use. Dr. Muncey did not explain any of this to Eyeglass World when he vacated the premises. The files numbered approximately twenty thousand and included an electronically stored patient list consisting of contact and prescription information and purchase history, and a paper file containing the optometrist's examination notes, patient history, and similar information.

{6} By June 7, 2007, Eyeglass World had spent several weeks and approximately $6,000 copying the patient files at night. Before copying the files, Eyeglass World consulted with the company's corporate attorney who advised that copying the files would not violate New Mexico law, the lease agreement, or the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Eyeglass World did not inform Dr. Muncey that it was copying the patient files, nor did Eyeglass World seek his authorization to access or copy the files. Eyeglass World concluded its copying of the files on July 10, 2007, and placed the files in a storage room.

{7} Dr. Muncey became aware that Eyeglass World was in the process of copying his files sometime in mid-June 2007. Acting on the advice of his attorney, Dr. Muncey did not contact Eyeglass World or demand that they stop copying the files. Dr. Muncey explained that he did not demand that the copying immediately stop, nor did he pick up the files because he “was advised to not go near that[,]” and he left them there at the advice of his attorney. Dr. Muncey also never asked that Eyeglass World return the original files or the copies. At no time was Dr. Muncey denied access to the files or restricted from picking up any files. Except for a portion of the patient files relating to LASIK, Dr. Muncey made no arrangements to retrieve any of the files and made no request that any files be returned to him.

{8} In late June 2007, Dr. Muncey sought reinstatement of his breach of contract case on the district court docket in order to determine his rights and damages for Eyeglass World's alleged failure to comply with the lease and termination agreements. During July and August 2007, the parties, through their attorneys, engaged in correspondence regarding the files, as we set out in detail later in this Opinion. In September 2007, Eyeglass World submitted a complaint to the State Regulation and Licensing Department, Compliance Section, addressed to the Optometry Board, regarding Dr. Muncey's refusal to collect his files after Eyeglass World requested that he get them.

{9} The court granted reinstatement of Dr. Muncey's case in August 2007, after which, in December 2007, Dr. Muncey filed a motion for leave to file an amended complaint (1) alleging that Eyeglass World, between June 12 and June 31, 2007, obtained possession of and copied his patient files attempting to assert control over the files and to avoid having to pay Dr. Muncey $300,000 for his files; and (2) adding a claim in conversion. The amended complaint was filed in May 2008.^FN1

{10} At trial, in June 2009, Dr. Muncey argued two different theories for his claim of conversion. First, he asserted that by copying the patient files without his permission, Eyeglass World acted “in defiance of his right of exclusive control over the files.” Second, Dr. Muncey argued that copying the files for use by another doctor constituted an “unauthorized and injurious use of his property.” The use was injurious because, in Dr. Muncey's own words, the “records are the value[,]” and as stated by Dr. Muncey's attorney, “once those files were copied and were used by another optometrist, they represent [ed] little or no value to him.” Ultimately, the jury awarded Dr. Muncey $2,300,002, consisting of $1 on his breach of contract claim, $300,000 on his conversion claim, and $2,000,001 as punitive damages on the conversion claim. This appeal involves only the compensatory and punitive damages awards relating to the conversion claim.

DISCUSSION

I. JURISDICTION

{11} State law claims are preempted under § 301

of the Copyright Act if: “(1) the work is within the scope of the ‘subject matter of copyright’ as specified in 17 U.S.C. § 102 [ (1990) ], § 103 [ (1976) ]; and (2) the rights granted under state law are equivalent to any exclusive rights within the scope of federal copyright as set out in 17 U.S.C. § 106 [ (2002) ].” Ehat v. Tanner, 780 F.2d 876, 878 (10th Cir.1985). We review de novo whether § 301 of the Copyright Act preempts a conversion under New Mexico state law, which presents a question of law. 17 U.S.C. § 301(a); Trandes Corp. v. Guy F. Atkinson Co., 996 F.2d 655, 658 (4th Cir.1993).

A. The Scope of the Copyright Act

[1]

[2]

{12} Eyeglass World argues that the Copyright Act preempts Dr. Muncey's conversion claim because medical records fall within the general subject matter of copyright. We are unpersuaded. Congress provided copyright protection only for “original works of authorship fixed in any tangible medium of expression [.]” 17 U.S.C. § 102(a). As such, “[t]he sine qua non of copyright is originality. To qualify for copyright protection, a work must be original to the author.” Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 345, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991). The Copyright Act identifies the type of original works that merit protection, but it is silent on the topic of confidential medical records or patient...