Morris v. Scenera Research, LLC
368 N.C. 857
N.C.2016Background
- Morris was Scenera’s first employee; no written employment contract existed. He participated in a patent bonus program paying $5,000 for a filed patent application and $5,000 upon issuance.
- Scenera suspended the bonus program effective Jan 1, 2008; Morris claimed $210,000 in unpaid bonuses and threatened suit under the Wage and Hour Act (WHA).
- Defendants tendered $210,000 conditioned on Morris acknowledging Scenera’s ownership of inventions filed/issued between Jan 1, 2008 and June 17, 2009; Morris refused.
- Morris sued for breach of contract, fraudulent inducement, unjust enrichment, WHA and REDA violations; defendants counterclaimed for declaratory judgment of ownership and other claims. The business court tried the case; jury awarded WHA and REDA damages to Morris; court found Scenera owned the inventions and ordered assignments.
- On appeal, the Court of Appeals affirmed in part and reversed Morris’s right to seek rescission; the Supreme Court reviewed the issues on discretionary review.
Issues
| Issue | Morris’s Argument | Scenera’s Argument | Held |
|---|---|---|---|
| Whether issuance bonuses for patents pending at termination were payable under the WHA | Morris: issuance bonuses were earned at filing and thus calculable/owed despite later issuance status | Scenera: bonuses were not payable unless and until patents actually issued; not calculable at termination | Court: evidence exceeded a scintilla; question of entitlement and "calculable" is for the factfinder — trial court properly submitted to jury and denial of directed verdict/JNOV affirmed |
| Meaning of “calculable” under the WHA | Morris: can mean capable of being estimated; his formula (150 × $5,000 × 90%) produced reasonable calculable amount | Scenera: calculable cannot mean mere estimate; requires reasonable certainty, not speculation | Court: "calculable" is a question of fact for the jury; reasonable estimation permitted where supported by evidence and no contrary formula offered |
| Award of liquidated damages under WHA for unissued patents | Morris: liquidated damages mandatory when wages are due; withholding notice unreasonable as matter of law | Scenera: had reasonable grounds to believe no liability for issuance bonuses; good faith defense | Court: affirmed denial of liquidated damages — trial court did not abuse discretion because defendants had reasonable belief they owed no issuance bonuses |
| Trebling of REDA damages (willfulness) | Morris: defendants acted willfully and trebling is required | Scenera: conduct not willful; at most negligence or good-faith dispute | Court: defines willful as knowledge or reckless disregard; willfulness is a question of fact but statute assigns finding to the court — trial court’s finding (no willfulness) supported by competent evidence; trebling not required |
| Right to rescind employment agreement (rescission) | Morris: rescission available because failure to pay patent bonuses was a material breach | Scenera: rescission inappropriate because monetary damages are adequate and rescission would disturb the hired-to-invent allocation | Held: reversed Court of Appeals — rescission denied because legal remedies (monetary damages) are adequate and allowing rescission would undermine hired-to-invent doctrine |
Key Cases Cited
- Stark v. Ford Motor Co., 365 N.C. 468 (directed verdict/JNOV standard)
- Green v. Freeman, 367 N.C. 136 (de novo review statement for legal questions)
- Jenrette Transp. Co. v. Atl. Fire Ins. Co., 236 N.C. 534 (more-than-a-scintilla and damages proof standards)
- Kornegay v. Aspen Asset Grp., 204 N.C. App. 213 (standard and review for liquidated damages analysis under WHA)
- McLaughlin v. Richland Shoe Co., 486 U.S. 128 (definition of willfulness in FLSA context referenced for REDA willfulness)