Volumetrics Med. Imaging v. Atl Ultrasound

• Decision Date: 29 January 2003
• Docket Number: No. 1:01-CV-182.,1:01-CV-182.
• Court: U.S. District Court — Middle District of North Carolina
• Parties: VOLUMETRICS MEDICAL IMAGING, INC., Plaintiff, v. ATL ULTRASOUND, INC., Defendant.

243 F.Supp.2d 386

VOLUMETRICS MEDICAL IMAGING, INC., Plaintiff, v. ATL ULTRASOUND, INC., Defendant.

No. 1:01-CV-182.

United States District Court, M.D. North Carolina.

January 29, 2003.

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Michael S. Connor, Alston & Bird, LLP, Charlotte, NC, Michael P. Kenny, Angela Payne James, Alston & Bird, Atlanta, GA, Mark C. Hansen, Kevin B. Huff, Eduardo M. Penalver, Kellogg Huber Hansen Todd & Evans, P.L.L.C, Washington, DC, for Volumetrics Medical Imaging, Inc.

John L. Sarratt, Amie Flowers Carmack, Ann M. Anderson, Kennedy Covington Lobdell & Hickman, L.L.P, Raleigh, NC, for ATL Ultrasound, Inc.

MEMORANDUM OPINION

BEATY, District Judge.

I. INTRODUCTION

This matter comes before the Court on Defendant ATL Ultrasound Inc.'s ("Detfendant" or "ATL") Motion for Summary Judgment [Document # 47]. Also before the Court are Defendant's Motion to Strike [Document # 57] portions of declarations filed by Plaintiff Volumetrics Medical Inc. ("Plaintiff or "VMI") accompanying its memorandum in opposition to Defendant's Motion for Summary Judgment, and Defendant's Motion to Strike [Document #58] Plaintiffs Statement of Specific Facts. For reasons explained herein, Defendant's Motion for Summary Judgment shall be GRANTED in part and DENIED in part. Defendant's Motion to Strike portions of Plaintiffs declarations shall be DENIED, and Defendant's Motion to Strike Plaintiffs Statement of Specific Facts shall be GRANTED.

II. FACTUAL AND PROCEDURAL BACKGROUND

Defendant is a Washington corporation with its principal place of business also in Washington State. (Complaint ¶ 18.) Defendant's ultimate corporate parent is Royal Philips Electronics ("Philips"). (Compl, ¶¶ 8, 2.) Plaintiff is a Delaware corporation with its principal place of business in Durham, North Carolina. (Compl., ¶ 7.) Plaintiff alleges damages in an amount exceeding $75,000, to be more fully determined at trial. (Compl., ¶¶ 60, 68, 74, 79, 86, 91.) Hence, this Court has jurisdiction pursuant to 28 U.S.C. § 1332 as the parties are citizens of different states and the amount in controversy exceeds $75,000.

Plaintiff is a start-up company founded in 1991 by two researchers at Duke University, Olaf Von Ramm and Steve Smith, and by John Oxaal, a venture capital investor and former student of Dr. Von Ramm. (Brief in Sup. of Def.'s Mot. for Sum. Judg., at 1.) Plaintiffs corporate focus was developing the commercial applications of certain innovative medical technologies, including ultrasound diagnostic imaging machines capable of displaying images of the human body, in real time, in both two and three dimensions ("RT2D" and "RT3D"). (Compl, ¶ 1.) Plaintiff operated under government grants until 1995 when it began to obtain venture capital. (Brief in Sup. of Def.'s Mot. for Sum. Judg., at 1-2.) In addition to Mr. Oxaal, two of Plaintiffs principal investors were Bill Bright and Walter Wilkinson. (Id, at 2.)

In the fall of 1999 Plaintiff appointed Bright to locate a strategic partner to help take a RT3D ultrasound machine to market. (Id.) Upon invitation from Plaintiff, Defendant's Chief Technical Officer, Jacques Souquet, visited Plaintiffs demonstration of its ultrasound technology at the 1999 American Heart Association trade show. (Id.) Shortly thereafter Mr. Souquet appointed David Croniser ("Croniser"), director of cardiology product development, to learn more about Plaintiff. (Id.) At the beginning of this learning process Plaintiff and Defendant signed a Mutual Nondisclosure Agreement to protect the confidentiality of any proprietary information they might share. (Dep.Exh. 396.)

Through the early months of 2000, representatives from Plaintiff and Defendant met on three occasions. In January 2000, Plaintiff gave a presentation about its 3D technology to Croniser and two of Defendant's senior engineers, Roy Peterson and David Roundhill. (Compl, ¶ 17; Brief in Sup. of Def.'s Mot. for Sum. Judg., at 2.) On February 28 and 29, 2000, Plaintiffs engineers and Defendant's engineers had a detailed discussion about a potential joint machine that would utilize technology from both companies. (Compl, ¶ 20-21; Brief in Sup. of Def.'s Mot. for Sum. Judg., at 2.) At the same time, Croniser met with Plaintiffs business representatives to discuss a preliminary structure of a potential business deal between ATL and VMI. (Compl, ¶ 22; Brief in Sup. of Def.'s Mot. for Sum. Judg., at 2.) In March 2000, three of Plaintiff representatives demonstrated Plaintiffs 3D technology at Defendant's headquarters in Bothell, Washington to some of Defendant's engineers and to various members of Defendant's management, including CEO Tim Mickelson. (Compl, ¶ Brief in Sup. of Def.'s Mot. for Sum. Judg., at 2.)

At a meeting in Durham, N.C. on April 13 and 14, 2000, Croniser and three of Plaintiffs investors -Bright, Oxaal, and Wilkinsonmet to further discuss a potential deal involving a possible joint venture and/or corporate purchase of VMI by ATL. (Compl, ¶ 28.) The group ultimately generated a document entitled "ATL/Volumetrics Term Sheet April 14, 2000 Rev. 1.01" ("Term Sheet"). (Compl., ¶ 28; Dep. Exh. 486.) Plaintiff points to this document as an indication of an alleged agreement between Plaintiff and Defendant. (Compl, ¶ 28-29.) This document, however, was not signed by either party.

Croniser, Peterson, and one of Defendant's financial analysts presented the idea for a potential VMI/ATL joint project to their superiors during a meeting of Defendant's management council on June 16, 2000. (Brief in Sup. of Def.'s Mot. for Sum. Judg, at 4.) In the days following the meeting at ATL Croniser described the meeting's substance in voicemails to Jim Mundell, Plaintiffs Vice President and General Manager, and to Steve Grenon, Plaintiffs Vice President and Chief Technical Officer. (Id.) Each of Croniser's voicemails also discusses Philips, Defendant's corporate parent, stating in one of the messages that "we have at least gotten over the first hurdle, the ATL hurdle and now we have two Phillips [sic] hurdles to go through. One is the Michelson's [sic] Group and the second one is the whole Board of Directors for Philips corporate." (Dep.Exh. 458.) Similar references to Philips appear in the other voicemails. (See Dep. Exh. 458; Dep. Exh. 491.) Mundell and Grenon had the text of the voicemails transcribed and provided them to Bright. (Id.) In turn, Bright sent an email to Plaintiffs other principal investors and to three of Plaintiffs directors informing them of Croniser's reports. (Dep.Exh. 488.) Thereafter, Plaintiff alleges it committed its engineers and other employees to using 100% of their time to work on a joint VMI-ATL ultrasound machine. (Compl, ¶ 29.)

Around June 2000, Plaintiff provided Defendant with engineering resource and budget information, and Plaintiff and Defendant worked together to develop a joint budget. (Compl., ¶ 30c.) Throughout July 2000, Plaintiffs engineers and Defendant's engineers corresponded with each other with questions and information regarding the technical details of the potential machine. (See Grenon Decl, ¶¶ 35f-35s and citations contained therein.)

Croniser met again with Plaintiffs business representatives on July 7, 2000. Croniser informed them that the Philips Mergers and Acquisitions group had become preoccupied with negotiations for another potential deal, and that he did not know the nature of those negotiations. (Compl, ¶ 41; Brief in Sup. of Def.'s Mot. for Sum. Judg., at 5.) Croniser predicted this would cause a delay, which could span two or more months. (Compl., ¶ 41.)

On July 14, 2000, Roundhill and Peterson of ATL traveled to VMI for a joint engineering meeting and reviewed design plans for the joint product, product cost projections, and other development plans. (Compl, ¶ 31.) As a result of the meeting, Plaintiff and Defendant developed a list of action items, which assigned tasks for both parties to complete. (Id.) Jim Mundell of VMI emailed the list of action items to Defendant and, in his email cover letter, described the list as "a summary of the action items we generated in our meeting last Friday" and, later in the email, informing ATL that he would "be more insistent [sic] as time goes on that we assign names, priority and dates to each item so that we can successfully drive our project and companies forward." (Dep.Exh. 61.)

Throughout July, August, and September of 2000, Croniser of ATL and Bright of VMI talked several times. Croniser also communicated with Plaintiffs Vice President and Chief Technical Officer Grenon. Croniser kept Plaintiff posted on the status of progress toward finalizing the joint transaction and was generally optimistic about "moving forward." (Compl, ¶ 42, 44-47; Dep. Exhs. 458, 491.) As a reason for the delay, Croniser stated that Mickelson, Defendant's CEO, was tied up with the other transaction, as were the mergers and acquisitions people at Philips. (Compl, ¶¶ 41, 47; see also Dep. Exh. 495.)

Croniser traveled to Durham, N.C. to meet with VMI again on September 18, 2000. (Compl, ¶ 48.) The purpose of this visit, as described in an email from VMI's Jim Mundell to the company's engineers, was to "assure us that ATL is still very interested in working with us ...." (Dep. Exh. 191.) Mundell also noted that "[t]here will be no negotiations occuring [sic] during this visit. As we have said before, no negotiations will take place until the Philips lawyers become available." (Id.) The meeting included a presentation by Croniser to all of VMI's employees. (Dep.Exh. 495.) Bill Bright of VMI generated notes from the meeting, which reflect that Bright's impression of "the outside [time frame Croniser was] look[ing] at was four weeks or maybe five weeks that we ought to have negotiated and gotten the final deal." (Id.) At the end of the day, Bright drove Croniser to the airport and the two of them discussed the potential deal further. Blight's notes also reflect...