By Paul Krueger
A federal jury ordered a local medical device manufacturer to pay at least $27 million to a former distributor for interfering with the distributor’s business.
According to court documents and trial testimony, the dispute started in 2012, when San Diego-based NuVasive, Inc. allegedly fired Madsen Medical, a Nevada medical supply company that sold NuVasive products to hospitals and surgeons in Las Vegas and Reno.
Madsen Medical’s owner, Kris Madsen, claimed NuVasive, which makes devices for spinal surgery, breached its contract with Madsen by hiring six of Madsen’s sales representatives and having them sell directly to Madsen’s former clients.
The San Diego jury heard 13 days of evidence and argument in the dispute. After several hours of deliberating on Friday, jurors sided with Madsen Medical.
The jury agreed Madsen wrongly suffered a $7.5 million loss for interference of contract and lost profits. Jurors also agreed NuVasive wrongly earned $14 million in sales proceeds in Nevada after firing Madsen and hiring the company’s former sales reps. The jury’s award includes $20 million in punitive damages against NuVasive, which is headquartered in Sorrento Valley.
Unlike most verdicts, NuVasive will not have to pay Madsen both amounts.
Instead, Judge Barry Ted Moskowitz will review the evidence and verdict and consider post-trial written arguments from both sides before deciding which of the two damage amounts — either $7.5 million or $14 million — NuVasive will have to pay Madsen, if affirmed.
Regardless of the outcome, Madsen’s attorney, Joe Ybarra, said the verdict confirmed his client’s claim that NuVasive had violated its contract with Madsen Medical and Kris Madsen.
“We’re very proud of our client,” said Ybarra.”She stood up for herself and her rights, and we’re really proud that the jury vindicated her.”
NuVasive declined a request for an interview, but confirmed it will ask Judge Moskowitz to set aside the jury’s verdict and vacate the damage wards.
“We are aware that the court in the Madsen case reached a verdict unfavorable to NuVasive, and we are in the process of filing post-trial motions to overturn the verdict and/or seek a new trial,” the company said in a statement released Tuesday to NBC 7 Investigates. “We believe that neither the law nor the facts support the verdict in this matter, and we intend to appeal in the event our post-trial motions are unsuccessful and a judgment is entered by the Court. As this is an ongoing litigation matter, our policy is not to comment further.”
On Monday, the jury deliberated a second time on the issue of punitive damages.
In court, Ybarra told jurors NuVasive had not only broken its contract but acted with “malice, fraud or oppression” and the knowledge that what it was doing was wrong. He asked the jury to award Madsen an additional $15 million in damages, for that allegedly malicious behavior.
NuVasive’s attorney pointedly disagreed in court, telling jurors that NuVasive’s behavior did not rise to the level required for punitive damages of any amount.
After deliberating less than a day, the jury ordered NuVasive to pay Madsen an additional $20 million in punitive damages.
“Big corporations have to deal fairly with their business partners,” Ybarra said of the jury’s award. “You can’t just trample over their rights. That’s what the jury understood.”
Ybarra said the jury’s award of $27.5 million on the low end, or $34 million on the high end, would be one of the biggest verdicts in a civil business dispute in California in recent years.
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