Pontchartrain Med. v. Roche Biomed. Lab.

677 So. 2d 1086, 1996 WL 375284
CourtLouisiana Court of Appeal
DecidedJune 28, 1996
Docket95 CA 2260
StatusPublished
Cited by15 cases

This text of 677 So. 2d 1086 (Pontchartrain Med. v. Roche Biomed. Lab.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pontchartrain Med. v. Roche Biomed. Lab., 677 So. 2d 1086, 1996 WL 375284 (La. Ct. App. 1996).

Opinion

677 So.2d 1086 (1996)

PONTCHARTRAIN MEDICAL LABS, INC.
v.
ROCHE BIOMEDICAL LABORATORIES, INC., Ellen Landry, and Carol Hall.

No. 95 CA 2260.

Court of Appeal of Louisiana, First Circuit.

June 28, 1996.

*1087 Matthew K. Brown, New Orleans, for Plaintiff-Appellant.

James A. Babst, New Orleans, for Defendant-Appellee.

Before PARRO, KUHN, JJ., and IAN W. CLAIBORNE, J. Pro Tem.[1]

AN W. CLAIBORNE, Judge, Pro Tem.

Pontchartrain Medical Labs, Inc. (plaintiff), sued Roche Biomedical Laboratories, Inc. (defendant), alleging it misappropriated trade secrets belonging to plaintiff, breached its contract with plaintiff, and violated Louisiana laws prohibiting unfair trade practices.[2] After a three-day jury trial, a verdict was rendered in favor of defendant, and the trial court entered judgment accordingly. Plaintiff appeals.

The jury found defendant did not breach its contract with plaintiff and did not engage in unfair trade practices. Plaintiff does not contest these findings. Plaintiff's appeal is based on the jury's findings on the trade secrets issue, which it contends are inconsistent.

FACTUAL BACKGROUND

In 1981 R. Scott Foster, a microbiologist and immunologist, initiated the formation of Pontchartrain Medical Labs, Inc., a local service laboratory (stat lab), to provide medical testing for doctors, clinics, hospitals, veterinarians, *1088 and anyone else who needed rapid test results in the three-parish area north of Lake Pontchartrain. (St. Tammany, Tangipahoa, and Washington Parishes comprise this area, known locally and referred to hereinafter as "the Northshore".) Local physicians provided financial backing and were investors/owners. A stat lab performs only simple standardized tests. More complex tests are done at a reference lab. Foster selected defendant as plaintiff's reference lab.

Plaintiff's client base and revenue steadily increased. At first, Foster did everything himself, from soliciting business to running tests to typing bills. In 1983 plaintiff began questioning whether it should continue to use defendant as its reference lab. To foster their business relationship, defendant proposed a closer alliance with more support for the lab. On April 1, 1984, Foster became an employee of both plaintiff and defendant, receiving pay from both. Defendant hired Ellen Landry, a registered medical technologist, as lab supervisor.

In 1985 Foster was transferred to defendant's office in North Carolina. Foster, as plaintiff's president, performed certain administrative functions from his home in North Carolina, but he had no part in the day-to-day activities of the lab. On August 30, 1985, plaintiff contracted with defendant. The contract declared the parties were "independent entities contracting with each other" and neither should be "construed to be the agent, employer or representative of the other." Defendant agreed to establish and maintain the lab within plaintiff's facility, to provide reference lab testing, to comply with plaintiff's then-current fee schedule, to rent the facility and all equipment from plaintiff, to maintain the equipment at its expense, to hire and pay all employees, to provide all necessary supplies, to conduct all billing, and to pay plaintiff a 5% commission on all billings except those to Highland Park Hospital. The contract stated a copy of the fee schedule and of plaintiff's customer list were attached, although nothing is attached to the copy of the contract in the record.

Foster testified he gave defendant a list of the sixty to seventy customers plaintiff had at the time. The list contained each customer's special prices. He also wrote all of plaintiff's customers advising them of the change. Landry stated she was unaware of this customer list.

Defendant brought in sales representatives and in April 1986 computerized the lab. Carol V. Hall, one of defendant's sales representatives, took over the Northshore territory in early 1986. She stated she did not have access to a customer list. She made "cold calls," determining a doctor's specialty from the telephone book and getting the doctor's special pricing from his or her staff, if possible.

On December 11, 1986, plaintiff and defendant entered into a new contract which increased the commissions paid to plaintiff from 5% to 10%. Defendant again agreed to comply with the current fee schedule. The agreement stated the fee schedule was attached, although there are no attachments to the copy of the contract in the record. No mention is made in the 1986 contract of a customer list.

In 1988 defendant's president, Dr. Powell, became concerned about federal investigations into physician-owned labs. Powell decided to change or terminate any relationships defendant had which might lead to federal investigations. On June 30, 1988, defendant's assistant vice president, Daniel P. Apple, wrote plaintiff and advised it that defendant was exercising its rights under the contract to terminate the agreement upon ninety days written notice. Apple stated the termination would "be effective September 30, 1988 unless RBL and PML can prepare and implement a mutually acceptable alternative arrangement."

Apple analyzed data regarding plaintiff and worked with defendant's counsel to prepare an offer for defendant to buy plaintiff. Apple reached the conclusion the lab was worth $250,000.00. However, Powell decided to offer twice that sum. He told Apple he was willing to "take a hit" in order to get out of a physician-owned arrangement while continuing a good relationship with those doctors.

*1089 In July 1988 defendant offered $550,000.00, to be paid over five years, but the offer was rejected. Dr. Gerald Foret, an investor in plaintiff and its treasurer, testified the offer was rejected because the investors did not think it was enough. Foster stated the investors thought the annual payments under the buyout agreement were equal to the annual commissions. The investors believed if they accepted the offer, they would receive the same amount of money they had been receiving for five years, and then they "would have no assets to show and the lab would be out of [their] control."

Apple testified that about this time, more articles appeared in professional journals about the government "cracking down" on physician-owned labs, and Powell decided to terminate all physician-owned lab arrangements. On August 19, 1988, defendant notified plaintiff its offer was rescinded.

What defendant did not know when it sent the termination letter, offered to buy plaintiff, and then rescinded the offer was that plaintiff was already negotiating with Smith-Kline Bio-Science Laboratories, another large corporation, for it to manage the lab. Landry learned in August 1988 that plaintiff planned to contract with SmithKline when two of the physician-investors came to the lab and informed her of the change. She stated they also asked her if she could surreptitiously get pricing information for them from the computer. Landry testified she refused their request for three reasons: 1) the information stored in the computer was not in list form; 2) she had a confidentiality agreement with defendant; and 3) she felt uncomfortable getting the information secretly. She told them she was certain they could get the information from Apple or from anyone at defendant's Lab Concepts Division. She stated Foret came by later and asked about pricing information. She told him to ask Apple for the information.

Rather than contacting Apple, plaintiff's counsel wrote to defendant on September 19, 1988.

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Cite This Page — Counsel Stack

Bluebook (online)
677 So. 2d 1086, 1996 WL 375284, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pontchartrain-med-v-roche-biomed-lab-lactapp-1996.