Braun v. Medtronic Sofamor Danek
15-4173
| 10th Cir. | Dec 14, 2017Background
- Dr. John Braun, an orthopedic surgeon, licensed his fusionless scoliosis bone-anchor invention to Medtronic in 2000 for an upfront payment, a patent bonus, and a 5% royalty; Medtronic contractually committed to a development plan including preparing an IDE and obtaining PMA if necessary.
- Braun performed animal (goat) studies over several years; Medtronic largely did not pursue the IDE/human-trial path it had promised and instead explored lower-cost 510(k) strategies and prioritized other fusionless concepts.
- Braun sued in 2010, and a jury found Medtronic liable for breach of contract, breach of the covenant of good faith, trade-secret misappropriation (nominal damages), and fraudulent inducement (including willful/reckless conduct), awarding roughly $37 million in total (compensatory plus punitive damages).
- The district court denied Medtronic’s post-trial Rule 50(b) and Rule 59 motions; Medtronic appealed the sufficiency/amount of damages, alleged inconsistency of verdicts, and challenged the punitive damages instruction/award under Utah law.
- The Tenth Circuit reviewed preservation of arguments, applied deferential abuse-of-discretion review to remittitur/new-trial claims, and de novo review for JMOL issues, ultimately affirming the district court in all respects.
Issues
| Issue | Plaintiff's Argument (Braun) | Defendant's Argument (Medtronic) | Held |
|---|---|---|---|
| Sufficiency/amount of compensatory damages (lost profits) / remittitur or new trial | Braun: introduced expert evidence and other record evidence showing lost-profits/lost-value with reasonable certainty; jury could credit his testimony and Medtronic’s own projections | Medtronic: lost-profits proof was speculative given FDA approval uncertainties; damages amount unsupported and excessive — seek remittitur to $2.5M or new trial | Court: Medtronic forfeited some amount arguments; under Utah law and deferential review, the district court did not abuse discretion — damages permitted and not remitted |
| Inconsistent damages verdicts (contract v. fraudulent inducement) | Braun: jury could reasonably award different measures (U.S.-only royalties vs. broader lost-value) and instructions allowed any reasonable formula | Medtronic: same theory should yield same damages; $9M divergence is irreconcilable | Court: plausible explanations exist (different measures and geographic scope); verdicts not irreconcilably inconsistent |
| Availability and sufficiency of punitive damages under Utah law | Braun: punitive damages proper because conduct met statutory standard (knowing and reckless indifference); no extra "aggravating circumstances" required for fraud | Medtronic: where underlying tort’s scienter overlaps punitive standard, Utah requires additional aggravating circumstances; here none proved | Court: Nelson’s aggravating-circumstances rule is limited to torts whose elements already include willful/malicious conduct; fraud’s recklessness element is distinct from the higher knowledge-of-harm standard for punitive damages, and record supports submission — punitive award upheld |
| Jury instructions on punitive damages | Braun: instructions properly distinguished fraud recklessness and punitive standard | Medtronic: instructions erroneous because they failed to require additional aggravating circumstances | Court: instructions accurately stated Utah law and correctly distinguished culpability levels; no reversible error |
Key Cases Cited
- Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996) (explains FDA device classification and PMA/510(k) distinctions)
- TMJ Implants, Inc. v. Aetna, Inc., 498 F.3d 1175 (10th Cir. 2007) (IDE context and clinical-trial significance for devices)
- M.D. Mark, Inc. v. Kerr-McGee Corp., 565 F.3d 753 (10th Cir. 2009) (preservation rules distinguishing Rule 50 and Rule 59 review)
- Therrien v. Target Corp., 617 F.3d 1242 (10th Cir. 2010) (highly deferential standard for remittitur/excessive-damages review)
- Blanke v. Alexander, 152 F.3d 1224 (10th Cir. 1998) (defendant’s burden to show verdict against weight of evidence for new trial)
- Daniels v. Gamma W. Brachytherapy, LLC, 221 P.3d 256 (Utah 2009) (distinguishes recklessness for liability from knowing-and-reckless standard for punitive damages)
- Nelson v. Jacobsen, 669 P.2d 1207 (Utah 1983) (discusses aggravating-circumstances rule in context of torts that include willful/malicious elements)
- Winsness v. M. J. Conoco Distribs., Inc., 593 P.2d 1303 (Utah 1979) (lost-profits proof must not be so meager as to invite speculation)