Schwarzenberger v. Louisiana State University Health Sciences Center New Orleans
Docket: NO. 2017-CA-0024
Court: Louisiana Court of Appeal; August 24, 2017; Louisiana; State Appellate Court
Judge Terrel J. Broussard, Pro Tempore, affirms the trial court's October 18, 2016 judgment granting summary judgment in favor of Louisiana State University Health Sciences Center-New Orleans and the LSU Board of Supervisors, thereby dismissing the claims of appellants Paul O. Schwarzenberger, M.D. and Clinical Oncology Research Associates, L.L.C. (CORA) with prejudice.
The appellants had initiated legal action on July 15, 2009, seeking a writ of mandamus, declaratory relief, damages, or injunctive relief, alleging breach of contract and failure by the appellees to transfer funds due to them. Dr. Schwarzenberger, a former tenured associate professor at LSU, entered into agreements with pharmaceutical companies GlaxoSmithKline, NovaRx, and Ligand to conduct clinical trials on terminally ill patients. After resigning from his full-time position at LSU in 2004, he established CORA to continue these trials and sought the transfer of residual funds from LSU to CORA.
LSU countered with a reconventional demand, claiming that Dr. Schwarzenberger mismanaged the clinical trial finances, breaching his employment agreement. The appeal centers on three summary judgment motions filed by LSU concerning the appellant's contractual claims, mootness regarding the Ligand trials, and breach of contract and fiduciary duty claims related to the GlaxoSmithKline trials.
During a hearing on August 13, 2015, the trial court evaluated expert testimony from both parties, ultimately determining it lacked the necessary scientific rigor to assist in the case. Consequently, the court excluded the expert deposition testimony offered by the appellant regarding lost profits.
LSU's motions for summary judgment were granted by the trial court on October 18, 2016, dismissing plaintiffs' claims related to the Ligand 48/49 trials due to mootness and their contract claims with prejudice under Louisiana Code of Civil Procedure article 1920. The decision is currently under appeal. The appellant contends that the trial court erred in excluding expert testimony from Holly Sharp, CPA, who was hired to assess CORA’s financial claims against LSU and evaluate the auditors' calculations of trial-related costs. The appellant argues this exclusion contradicts the standards set forth in Daubert v. Merrell Dow Pharmaceuticals, Inc. LSU counters that the trial court acted within its discretion, referencing case law that supports the exclusion of testimony when the expert fails to meet qualifications necessary under Louisiana Code of Evidence article 702. This article requires that the expert’s knowledge aids the fact-finder, and outlines additional criteria for admissibility, including reliance on sufficient facts, reliable methodologies, and proper application of those methods. The Daubert-Foret pretrial hearing is mandated for determining expert qualifications and methodology reliability, with the burden on the party requesting the hearing to demonstrate its necessity. If a timely and adequately supported motion is filed, the court is obliged to conduct a contradictory hearing to evaluate the expert's qualifications and methodologies.
A trial judge's gatekeeping function involves a preliminary assessment of the scientific validity of expert testimony and its applicability to the case facts, as established in Daubert. Failure to properly execute this role risks introducing prejudicial or misleading evidence, necessitating a careful evaluation of the underlying methodology. In the current case, the relevance of accounting and audit principles to the alleged contract breach is highlighted. The trial court must consider factors such as testability, peer review, error rates, and general acceptance in the scientific community when assessing expert reliability. The trial court exercised its discretion in striking Ms. Sharp’s deposition testimony based on a three-pronged test, which is upheld unless there is an abuse of discretion. Established case law supports that decisions on expert qualifications fall within the trial court's discretion and will only be overturned for capricious or arbitrary actions or misinterpretation of the law. Ultimately, the trial court found Ms. Sharp's testimony deficient in methodology and scientific rigor, leading to the conclusion that it could not aid in judicial deliberations.
The trial court referenced Manning v. Crockett, emphasizing that an expert must actively prepare their report rather than simply signing off on one created by others, as this contradicts Rule 26(a)(2)(B). It determined that once expert Ms. Sharp was excluded, the appellant failed to prove damages and did not present the excluded evidence for review on appeal, nor did he preserve his objection under La. Unif. R. Ct. App. 2-124. Ms. Sharp's report was found lacking scientific basis and methodology, leading to the court appropriately exercising its gatekeeping role by excluding her testimony.
In the summary judgment arguments concerning contract claims and damages, the appellant argued that the trial court wrongly granted summary judgment, focusing on LSU's assertion that he could not prove damages. He claimed LSU's discovery responses supported his position that he worked without compensation after leaving LSU. However, he had not calculated these services at the time of his testimony and contended that LSU was aware of his losses through their expense deductions related to his 'Investigator fees.' The appellant also argued the trial court erred in excluding Ms. Sharp’s testimony, which he believed could substantiate his damages, and alleged that LSU deprived him of compensation, asserting a genuine dispute of material fact existed regarding his damages.
LSU countered that two trial sponsors had paid over $140,000 to CORA, deposited in the appellant’s personal accounts, leading to a separate misappropriation claim that was dismissed. In reviewing the case, the court will examine the evidence and determine if any genuine material fact issues remain. LSU's motion for summary judgment included the trial agreements for Ligand 48 and 49, detailing the appellant's role as Principal Investigator and specific payment terms related to the clinical study agreements, including conditions for payment and terms for handling overpayments.
LSU provided multiple agreements related to clinical studies, including the Ligand 49 clinical study effective November 20, 2001, which allowed an initial payment of $4,000. Additional agreements between LSU, GlaxoSmithKline, and NovaRx became effective on September 1, 2002, and March 17, 2003, respectively, designating the appellant as the 'Investigator' responsible for the studies and detailing their budgets. An April 19, 2004 Letter of Assignment indicated that the appellant would transition to part-time faculty in LSU’s Department of Genetics, emphasizing that he was not expected to initiate new clinical trials and that any inactive trials should be closed. The letter was signed by several LSU officials and the appellant.
In a deposition, the appellant claimed LSU breached contracts by requiring the transfer of cancer patients when his status changed. He acknowledged that CORA received about $35,000 for research from an Amgen study prior to his reassignment. When questioned about his claimed financial losses, the appellant indicated he did additional work without compensation but had not quantified any loss or potential profits related to LSU’s actions. Records from the Louisiana Secretary of State concerning Clinical Oncology Research and various letters of assignment were also included. Additionally, excerpts from a deposition of Roy Clay, which reviewed data from thirteen patients over three years to assess damages, were attached. The appellant contends that the trial court erred in granting summary judgment, asserting that material disputes regarding his claims for damages exist, and that the interpretation of contracts should be assessed as a matter of law without needing extrinsic evidence, citing applicable legal precedents.
The parties involved acknowledge that there is no disagreement regarding the contract terms, which involve a 'Sponsor' (a pharmaceutical company) and an 'Evaluator' (LSU), with the appellant designated as the 'Principal Investigator.' Payments from the 'Sponsor' to the 'Evaluator' continue until the contract is terminated. Termination provisions allow the 'Sponsor' to end the contract at any time or with two months' notice, while the 'Evaluator' can terminate under specific uncontrollable circumstances, receiving compensation only for actual costs incurred. In the case between LSU and GlaxoSmithKline, termination requires efforts to revoke financial obligations, and compensation is limited to work performed and reasonable expenses incurred before termination.
Evidence submitted by LSU, including audits of studies post-appellant's departure, was not successfully challenged by the appellant, who relied on CPA Holly Sharp's testimony regarding alleged damages from breach of contract. The trial court struck this testimony, preventing the appellant from proving damages, and leaving LSU's audits uncontradicted. The appellant's claims of continuing patient treatment using personal funds lacked supporting evidence and did not create a material factual dispute.
A motion for summary judgment can be granted if it demonstrates no genuine issue of material fact exists, with the burden of proof on the mover. If the mover does not bear the burden of proof at trial, they must indicate the absence of factual support for the adverse party's claims. Appellate review of summary judgment is de novo, applying the same criteria as the trial court. The district court appropriately dismissed the appellant's uncorroborated testimony regarding lost profits, noting that loss of profits is more liberally recognized in tort cases than in breach of contract actions.
In breach of contract cases, plaintiffs can recover lost profits if proven with reasonable certainty, meaning the loss must be more probable than not. A review of the trial court's summary judgment in favor of LSU on the appellant’s contract claims found no error. The appellant argued that the court improperly assessed credibility, suggesting reliance on precedents indicating that mere descriptions of activities without specifics do not support a damages claim. LSU contended that the appellant failed to identify a contract with LSU since the letters of assignment were between LSU and CORA, asserting that the appellant's personal losses were irrelevant to the existence of a genuine material fact. The court clarified that evaluating credibility is not appropriate in summary judgment proceedings. The record indicated no evidence of credibility assessment by the trial court, which correctly analyzed the material facts to apply the law.
Additionally, the appellant claimed the trial court erroneously deemed his Ligand claims moot, arguing he was denied the chance to contest LSU’s audits. A case is considered moot when a judgment cannot provide practical relief. The trial court found the claims moot as LSU had already settled payments related to the residual funds after the termination of clinical studies, and the appellant did not provide sufficient evidence to support his claims or prove damages. Consequently, the trial court's summary judgment in favor of LSU regarding the contract and mootness claims was affirmed. The document also references two Ligand trials and notes a lack of information about the appellant's occupation and expertise. In the relevant contracts, GlaxoSmithKline and NovaRx are identified as the 'Institution' and 'Center,' respectively, while Dr. Schwarzenberger is referred to as the 'Principal' or 'Principal Investigator.'
