Cox Nuclear Pharmacy, Inc. v. CTI, Inc.

478 F.3d 1303, 67 Fed. R. Serv. 3d 548, 2007 U.S. App. LEXIS 3264, 2007 WL 446549
CourtCourt of Appeals for the Eleventh Circuit
DecidedFebruary 13, 2007
Docket05-14713
StatusPublished
Cited by64 cases

This text of 478 F.3d 1303 (Cox Nuclear Pharmacy, Inc. v. CTI, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cox Nuclear Pharmacy, Inc. v. CTI, Inc., 478 F.3d 1303, 67 Fed. R. Serv. 3d 548, 2007 U.S. App. LEXIS 3264, 2007 WL 446549 (11th Cir. 2007).

Opinion

BIRCH, Circuit Judge:

This is a case about a failed transaction for the sale of a cyclotron, a device used to create radioactive pharmaceuticals. Appellant Cox Nuclear Pharmacy, Inc. (“Cox”) brought claims against Appellee CTI, Inc. (“CTI”) for breach of contract and fraud, and CTI responded with a counterclaim against Cox for breach of contract. Cox appeals the district court’s grant of summary judgment in favor of CTI on all of Cox’s counts and on CTI’s counterclaim, as well as the district court’s denial of a motion for relief from judgment under Federal Rule of Civil Procedure 60(b). For the reasons set forth below, we AFFIRM on all grounds.

I. BACKGROUND

Cox is an Alabama corporation, based in Mobile, that provides radioactive pharmaceuticals to hospitals and clinics in the Mobile area, southern Mississippi, and the panhandle of Florida (the “Market”). CTI is a Tennessee corporation that manufactures cyclotrons for use in positron emission tomography (“PET”), and provides services related thereto. P.E.T.Net Pharmaceuticals, Inc. (“P.E.T.Net”) is also a Tennessee corporation, and is a wholly owned subsidiary of CTI. P.E.T.Net produces radioactive pharmaceuticals using CTI cyclotrons.

A PET scan is a medical diagnostic procedure in which radioactive isotopes are introduced into the body, and an imaging device, or “scanner,” is used to focus on those isotopes. The substance that is introduced into the body during a PET scan is known as fluorodeoxyglucose (“FDG”). A cyclotron is necessary to produce FDG, which has a half-life of under two hours, and must therefore be consumed quickly after it is produced.

In 2000, Cox began selling FDG in the Market. Because no nuclear pharmacy was operating a cyclotron in the Market at that time, Cox had to fly in doses of FDG from elsewhere, which it purchased from various companies, including P.E.T.Net. At some point in 2000, Cox began to consider acquiring a cyclotron in order to produce FDG without the need to obtain it from outside the Market. Cox contacted CTI to discuss potentially purchasing a cyclotron, and CTI provided Cox with a price quote for a cyclotron, a document projecting potential expenses and revenues associated with operating a cyclotron, and a document comparing the CTI cyclotron with a competing model sold by General Electric Corporation (“GE”). Steven Bel-cher, a representative of Cox, testified that during the time Cox was investigating the purchase of a CTI cyclotron, Cox also considered entering into an affiliation agreement with P.E.T.Net, which, among other things, would have given Cox access to new pharmaceutical products developed by P.E.T.Net. Belcher testified that Cox rejected the agreement in early 2001, after being assured by Ned Odeh, a representative of CTI, that Cox would receive all the benefits of the affiliation agreement if Cox purchased a CTI cyclotron.

*1307 In November 2001, as Cox continued to consider purchasing a CTI cyclotron, Cox’s sole shareholder, William Cox, arranged a meeting at a Cracker Barrel restaurant in Macon, Georgia that included himself, Bel-cher, other Cox employees, Odeh of CTI, and Steve Putnal, the operator of a CTI cyclotron in Macon. William Cox testified that he arranged the meeting in Macon because he “wanted to see Steve Putnal’s operation,” “talk to his personnel,” and see a CTI cyclotron in use. R2-83, Exh. 2 at 187-88. At the meeting, William Cox indicated that he was ready to purchase a cyclotron from CTI, but he wanted from CTI an agreement or understanding that its subsidiary, P.E.T.Net, would not compete with Cox in the Market. Though he was aware that P.E.T.Net was a wholly owned subsidiary of CTI, he also asked for assurances that his company’s purchase of a cyclotron from CTI would be kept secret from P.E.T.Net. Cox testified that, in response to his request for confidentiality, Odeh stated, “ ‘[I]f we’re not going to tell [P.E.T.Net] anything about you ordering a cyclotron, they’ll never know.’ [Odeh] said, ‘now, they may find out in the marketplace, but they’ll never know.’ ” Id. at 193. He also testified that Odeh promised CTI would assign Cox’s order a “secret number,” so that “nobody [would] ever know.” Id. at 194.

With respect to Cox’s request for exclusivity in the Market, he testified that Odeh indicated that “he couldn’t guarantee there [wouldn’t] be competition. He could just guarantee that P.E.T.Net wouldn’t be in there.” Id. at 196. William Cox also asked for a guarantee that P.E.T.Net would not compete with Cox within a certain distance of Cox’s cyclotron. He testified:

I wanted I think a hundred and fifty or two hundred mile radius, and [Odeh] said he didn’t think he could get that much, maybe it would be a seventy-five mile radius, but he wasn’t sure. That was a very minimum discussion. I just remember trying to get as — I felt like a two-hour drive is what I wanted.

Id. at 197. At the time of this meeting, Cox was aware that P.E.T.Net was planning to install a cyclotron in Covington, Louisiana.

Following the meeting in Macon, on 3 December 2001, Odeh sent a letter to William Cox that stated, in pertinent part:

I have noted your access to CTI’s newly developed chemistry modules and targets; however, I was unable to get a commitment on the seventy-five mile radius you requested. I was told that there are legal ramifications to providing exclusivity.
Rest assured that there are no plans, to my knowledge, for PETNet to move into this territory in the future. Please do not hesitate to check the PETNet website for current and future sites.

R2-83, Exh. 16. Cox testified that he received this letter “on or about” 3 December 2001. R2-83, Exh. 3 at 591. The following day, December 4th, William Cox executed a purchase agreement for a CTI cyclotron.

Several days after Cox executed the purchase agreement for a CTI cyclotron, on December 8th or 10th, Belcher received a telephone call from Rick Hiatt, an employee of P.E.T.Net. Belcher testified that Hiatt asked him if it was true that Cox was planning to install a cyclotron in Mobile, and proceeded to warn Belcher “what a mistake it was” for Cox to proceed with those plans, the implication being that Cox would be unable to survive competition from P.E.T.Net. R3-97, Exh. 1 at *1308 202. During the course of the conversation with Hiatt, Belcher confirmed that Cox had purchased a cyclotron from CTI, and planned to install it in Mobile.

Subsequent to Belcher’s conversation with Hiatt, Cox learned that P.E.T.Net had been soliciting a Cox customer, the University of Southern Alabama (“USA”), and quoting significantly lower prices per dose of FDG than Cox had quoted. Bel-cher testified that P.E.T.Net also told USA that Cox was unable to produce certain types of isotopes that P.E.T.Net could produce. Belcher asked Odeh to send a letter to USA on CTI letterhead refuting those statements, but Odeh told Belcher he could not interfere in P.E.T.Net’s attempt to win the account. Moreover, P.E.T.Net also offered a lower price per dose to a Cox customer located in Panama City, Florida.

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478 F.3d 1303, 67 Fed. R. Serv. 3d 548, 2007 U.S. App. LEXIS 3264, 2007 WL 446549, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cox-nuclear-pharmacy-inc-v-cti-inc-ca11-2007.