Jasty v. Wright Medical Technology, Inc.

United States Court of Appeals
For the First Circuit

Nos. 07-1743
07-1744

MURALI JASTY, M.D.,

Plaintiff, Appellee/Cross-Appellant,

v.

WRIGHT MEDICAL TECHNOLOGY, INC;
WRIGHT MEDICAL GROUP, INC.,

Defendants, Appellants/Cross-Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. George A. O'Toole, Jr., U.S. District Judge]

Before

Howard, Circuit Judge,

Wolf,* District Judge,

and Besosa,** District Judge.

James L. Beausoleil, Jr., with whom Anthony L. Gallia, Duane
Morris LLP, and Darlene D. Moreau were on brief, for appellants.
Joanne D'Alcomo, with whom Howard P. Blatchford, Jr. and Jager
Smith P.C. were on brief, for appellee.

June 5, 2008

*
Of the District of Massachusetts, sitting by designation.
**
Of the District of Puerto Rico, sitting by designation.
 HOWARD, Circuit Judge. Appellants Wright Medical

Technology, Inc. and Wright Medical Group, Inc. (collectively,

"Wright") challenge the district court's summary judgment ruling

that Wright breached its contract with Dr. Murali Jasty, as well as

the district court's refusal to consider newly submitted facts on

review of the report and recommendation of a magistrate judge.

Jasty's cross-appeal challenges the district court's summary

judgment ruling that Wright did not violate state consumer

protection statutes. Jasty also challenges the district court's

decision not to compel a Wright expert to testify, as well as the

court's choice of law ruling with respect to the calculation of

prejudgment interest on a damages award. We affirm the district

court across the board.

I. Facts.

A. Background.1

Tennessee-based Wright Medical Technology, Inc. designs,

manufactures and markets orthopedic implant devices. Dr. Murali

Jasty, an orthopedic surgeon associated with Massachusetts General

Hospital, was one of a group of surgeons nationwide whom Wright

engaged to act as consultants and to help Wright develop and

commercialize a new artificial knee system, the "ADVANCE® Knee."

In March 1995 Wright entered into a written contract with Jasty.

1
This recitation is based on the record accepted by the district
court. We address in the next section the district court's ruling
striking certain evidence offered by Wright.

-2-
Under the contract, Wright agreed to compensate Jasty for providing

a variety of services in support of the development of the Advance

Knee.

Jasty's responsibilities, as set forth in the first

paragraph of the contract, were to "act as a designer, product

spokesperson and consultant." He agreed to provide Wright with

"services and expertise" including but not limited to:

(a) Current clinical design or other experience with
total knee systems . . . (b) Time away from [his]
practice necessary to participate in clinical consultant
meetings and/or technical meetings . . . (c) Time
necessary to review and co-author papers and publications
. . . (d) Time necessary to develop product educational
information . . . (e) . . . [R]eview[ing] clinical data
and mak[ing] oral presentations to peer groups,
regulatory agencies and the general public as required .
. . [and] (f) . . . [P]rovid[ing], at Wright's request,
regular written activity reports.

Compensation was to take three different forms: 1) a

flat payment, for the period November 1, 1994 through November 1,

1999, of $145,000 per year; 2) royalty payments for ten years based

on sales of the Advance Knee; and 3) specified payments on the date

of and subsequent anniversaries of Wright's initial public offering

("IPO"), should Wright become a publicly traded company. The

$145,000 annual payment for the period November 1994 to November

1999 was expressly designated as payment "in return for the above

services," that is, those set out in the first paragraph. The

contract further specified with respect to that annual payment,

"Payment of this sum is to compensate you for spending time away

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from your practice to provide such services and consultations to

[Wright] during that period as well as to compensate you for your

design input and the rights to commercialize . . . your rights to

inventions currently under patent." After November 1999, "all

payments for services under this Agreement shall be pursuant to

paragraph 2.b. (and paragraph 2.d. if applicable)." Paragraphs

2.b. and 2.d. provide for the royalty and IPO payments. The

contract also provided for an offset: should royalties based on

sales be payable prior to November 1, 1999, the annual payments

would be reduced by the amount of the royalty payments.

Under the royalty provision, Jasty would be entitled to

royalties "[w]hen a component of the Products results from these

collaborative efforts for which you have contributed significant

design input." Royalties were to be paid quarterly for ten years,

based on a specified percentage of net sales. This provision

contains no language about Jasty's services or any other

conditions, other than the requirement that Jasty must have

contributed "significant design input."

The IPO compensation provision establishes cash payments

if Wright were to become a public company. The first payment of

$100,000 would be made at the time of the IPO. Later payments of

$50,000 each were to be made on the first two anniversaries of the

IPO date, with another payment of $100,000 to be made on the third

anniversary. The IPO payments were to be triggered only if Jasty

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was "continuing to perform consulting services to [Wright] under

this agreement at the time of payment, unless such nonperformance

is due to death or disability".

Under the contract's termination provision, termination

for cause may be by either party on thirty days written notice and

after an opportunity to cure. The contract could also be

terminated for cause without written notice and opportunity to cure

for failure to comply with paragraph 5, the contract's exclusivity

provision. That provision prohibited Jasty from working on

competitor products. Additionally, the contract contained an as-

of-right termination provision for Jasty: on November 1, 1999,

Jasty would become free to terminate the contract.

It is undisputed that Jasty contributed to the

development of the Advance Knee and was eligible for royalties.2

He began receiving royalty payments under the contract in the

second quarter of 1995. Wright also made all of the required

$145,000 annual payments to Jasty between November 1994 and

November 1999.

The first sign of trouble in the consulting relationship

appeared in October 1998. Wright's then-President and CEO Tom

2
We understand the magistrate judge's report and recommendation to
find as an undisputed fact that Jasty was eligible for royalties
based on his initial contribution of "consulting and significant
design input." Wright appears to misapprehend this finding as a
statement that Jasty's ongoing contributions were undisputed.
Wright makes no argument, though, that Jasty's initial contribution
was insufficient to render him eligible for royalties.

-5-
Patton traveled to Boston to meet with Jasty to discuss Jasty's

work. Patton testified in his deposition that he informed Jasty of

Wright's dissatisfaction with his performance and that his contract

would be terminated if he did not conform his performance to

expected standards.

Contemporaneously, Patton sent Jasty a letter purporting

to summarize the meeting. In the letter, Patton stated, "I am glad

we had the opportunity to meet last week and discuss your ongoing

role with our business." The letter also mentioned Patton's

intention to "reduce our discussions to writing."

The letter continued: "[O]n-going promotional, marketing

and scientific services from you are critical to the success of the

Advance Knee, have always been contemplated by our agreement, and

provide the basis for continued payments under our contract." The

letter stated that Patton and Jasty "agreed that it was important

for [Jasty] to do" the following: "use the Advance Knee in the

majority of your knee cases," "host surgeons for surgical

demonstrations," "develop published studies from your lab" and

"make yourself more readily available to speak." In the letter,

Patton also expressed the view that Jasty's work in developing and

promoting a competing product was "unacceptable."

The letter contained no threat of termination. It did

not state that Wright considered Jasty in breach of the contract,

nor did it mention a thirty-day time frame or an opportunity for

-6-
Jasty to cure. The letter did advise Jasty that Wright personnel

would contact him regarding specific projects.

Almost three years later, in September 2001, Wright

terminated Jasty's contract via a letter from Wright's Senior Vice

President, Glen Coleman. That letter stated, "[t]his situation was

brought to your attention during a meeting with Tom Patton in

October 1998. Since that time, improvement has not been made . .

. we believe it is appropriate to . . . end the current consulting

agreement." The letter contained a settlement offer of royalty

payments through the end of 2002. In a March 2002 letter, Wright

retracted the settlement offer and stated that royalty payments had

ceased as of the end of 2001.

At this point, Wright had been paying royalties to Jasty

under the contract since 1995. In addition, Wright became a public

corporation in July 2001, and Jasty received $100,000 pursuant to

the IPO provision in the contract. As of the end of 2001, Jasty

had received annual payments of $145,000 for the years between

1994-1999, the $100,000 payment at the time of the July 2001 IPO,

and royalty payments based on sales of the product from 1995

through the last quarter of 2001.

B. Procedural History.

Jasty filed suit against Wright in Massachusetts state

court. In his June 2003 amended complaint, he claimed that Wright

-7-
breached the contract and violated the Massachusetts and Tennessee

consumer protection statutes, Mass. Gen. Laws ch. 93A and Tenn.

Code Ann. § 47-18-01.3 Wright timely removed the case to federal

court and counterclaimed on three issues: 1) breach of contract;

2) breach of the implied covenant of good faith and fair dealing;

and 3) the above-mentioned state consumer protection statutes.

The parties each sought summary judgment. A magistrate

judge recommended that partial summary judgment be granted to Jasty

on his breach of contract claim, as well as summary judgment on his

opposition to Wright's three counterclaims. As to Wright's cross-

motion for summary judgment on all of Jasty's claims, the

magistrate judge recommended awarding summary judgment to Wright on

Jasty's consumer protection claims and the other claims not on

appeal.

Wright objected to the magistrate judge's report, as

permitted by 28 U.S.C. § 636(b). As part of the objection, Wright

included a number of exhibits, many of which had not been before

the magistrate judge. The district judge adopted the magistrate

judge's report in its entirety, while striking the portion of

Wright's objection that relied on the new evidence.

Following the summary judgment rulings, a separate jury

trial was held on damages, and Jasty was awarded approximately $2.5

3
Jasty's other claims (quantum meruit, fraud and/or
misrepresentation and unjust enrichment) are not at issue in this
appeal.

-8-
million in damages. As requested by Wright, however, the district

court determined that Tennessee law on prejudgment interest would

apply, rather than Massachusetts law.

On appeal, Wright challenges both the district court's

resolution of the breach of contract claim and the district court's

failure to consider the new evidence submitted by Wright. Jasty

cross-appeals from the district court's denial of his consumer

protection claims. Jasty also challenges the district court's

decision not to compel a Wright expert to testify, as well as the

district court's choice of law determination regarding the

appropriate prejudgment interest rate.

II. Wright's Appeal.

A. Newly-Submitted Evidence.

We review the district court's decision not to consider

evidence on summary judgment for an abuse of discretion. See

Desrosiers v. Hartford Life & Acc. Co., 515 F.3d 87, 91 (1st Cir.

2008). That is to say, we will not set aside a decision by the

district court without "a definite and firm conviction that the

court below committed a clear error of judgment in the conclusion

it reached upon a weighing of the relevant factors." Hoffman v.

Applicators Sales & Serv., Inc., 439 F.3d 9, 14 (1st Cir. 2006).

Wright argues that the district court abused its

discretion in striking the newly-submitted evidence when it ruled

on Wright's objection to the magistrate judge's report. Wright had

-9-
objected to the magistrate judge's finding that Wright did not

provide sufficient notice to Jasty that it considered Jasty in

breach.

Wright first says that the district court erred in

misapprehending its ability to consider newly submitted evidence.

Under 28 U.S.C. § 636(b), a district court reviewing a magistrate

judge's report and recommendation has discretion whether to receive

further evidence.

A judge of the court shall make a de novo
determination of those portions of the report
or specified proposed findings or
recommendations to which objection is made. A
judge of the court may accept, reject, or
modify, in whole or in part, the findings or
recommendations made by the magistrate judge.
The judge may also receive further evidence or
recommit the matter to the magistrate judge
with instructions.

28 U.S.C. § 636(b) (emphasis added). Wright points to the district

court's statement in ruling to strike the evidence: "In the

absence of special circumstances, review of a Magistrate Judge's

Report and Recommendation should be limited to the record

considered by the Magistrate Judge. . . . Special circumstances do

not exist here." While this statement may not be a verbatim

recitation of section 636(b), it suffices to show that the court

understood the standard -- that it was not required to receive

further evidence but rather possessed discretion in the matter.

The magistrate judge's report concluded that there is "no

evidence that Wright ever communicated its continuing

-10-
dissatisfaction to Jasty after [] October 1998" (emphasis added).

In support of its contention that the district court thus should

have considered additional evidence of Jasty's ongoing failure to

perform, Wright has massaged the language of the magistrate judge's

observation, arguing that Wright was not under an obligation to

"continually" notify Jasty that he was not performing under his

contract. Wright is correct on this point, strictly speaking, but

its argument misses the mark. The magistrate judge had determined,

not that Wright needed to repeatedly provide notice, but rather

that the October 1998 letter by itself did not provide the required

notice and that Wright did not later advise Jasty of its continuing

dissatisfaction. The magistrate judge did not intimate that Wright

had a duty to continually complain to Jasty. Moreover, the issue

was notice, and evidence about whether Jasty sufficiently performed

under his contract after October 1998 was not probative on that

-11-
issue.4 We conclude that the district court did not abuse its

discretion in declining to consider the new evidence.

Wright initially filed a brief in this court that relied

on but did not identify the excluded evidence. Jasty requested

sanctions. First Circuit Local Rule 38.0 authorizes sanctions for

"vexatious litigation," where a party or attorney "files a motion,

brief, or other document that is frivolous or interposed for an

improper purpose, such as to harass or cause unnecessary delay, or

unreasonably or vexatiously increases litigation costs." Wright's

decision to incorporate the stricken evidence into its briefs

without identification as such was inappropriate, but we do not

conclude that it was vexatious. See Cruz v. Savage, 896 F.2d 626,

631-32 (1st Cir. 1990) (in context of 28 U.S.C. § 1927, "vexatious"

behavior understood as conduct displaying a "serious and studied

disregard for the orderly process of justice") (internal quotation

marks and citation omitted).

4
Wright attempted to introduce twenty-nine exhibits, consisting of
deposition testimony from Wright personnel, correspondence between
Wright personnel and Jasty, and internal Wright memoranda. The
deposition testimony described, inter alia, Wright's expectations
after October 1998 for Jasty's continued services to Wright under
the contract. The correspondence included post-October 1998
invitations to Jasty regarding courses, seminars, and speaking
engagements, and queries from Wright to Jasty about specific
studies or surgeries that Jasty had conducted. The internal
memoranda included post-October 1998 records of Jasty's attendance
and participation at various Advance Knee-related meetings and in
Advance Knee-related laboratory and clinical studies. None of the
exhibits, however, were related to the question of whether, between
October 1998 and September 2001, Wright communicated
dissatisfaction with Jasty's performance to Jasty himself.

-12-
B. Breach of Contract.5

Our review of the district court's rulings on summary

judgment is de novo, OneBeacon Am. Ins. Co. v. Travelers Indem.

Co., 465 F.3d 38, 41 (1st Cir. 2006), keeping in mind that summary

judgment is appropriate where no genuine issue of material fact

exists and the movant is entitled to judgment as a matter of law.

Fed. R. Civ. P. 56(c).6

Wright challenges the grant of summary judgment to Jasty

on the breach of contract claim. Wright argues that: 1) summary

judgment is inappropriate because the contract is ambiguous as to

whether Jasty had an obligation under the contract to provide

services to Wright after November 1, 1999; 2) Wright provided the

required written notice of its intent to terminate the contract

through the meeting and letter of October 1998; and 3) Wright had

5
Because there are no relevant differences between Massachusetts
and Tennessee law on the substance of the claims here, we decline
to decide which is controlling and use Massachusetts case law for
simplicity. See Okmyansky v. Herbalife Intern. of Am., Inc., 415
F.3d 154, 158 (1st Cir. 2005) (when a choice of law determination
would not alter the disposition of a legal question, a court need
not decide which body of law controls.) We review the district
court's choice of law determination only as to the calculation of
prejudgment interest.
6
We note that, as the district court did not abuse its discretion
in declining to accept Wright's newly offered evidence, neither
will we consider that evidence for purposes of reviewing the
summary judgment ruling. See APG, Inc. v. MCI Telecommunications
Corp., 436 F.3d 294, 297 n.1 (1st Cir. 2006) (review of summary
judgment rulings is limited to the record at the time of the
district court's decision); see also Hoffman, 439 F.3d at 14
(same).

-13-
not waived its ability to argue that Jasty had breached the

contract by continuing to pay Jasty through 2001.

Wright first argues that the contract is ambiguous as to

whether Jasty was obligated to provide services after November

1999, and thus the breach claim should not have been resolved on

summary judgment. "A contract is ambiguous if an agreement's terms

are inconsistent on their face or where the phraseology can support

reasonable differences of opinion as to the meaning of the words

employed and obligations undertaken." Nicolaci v. Anapol, 387 F.3d

21, 26 (1st Cir. 2004) (citing Lohnes v. Level 3 Communications,

Inc., 272 F.3d 49, 53 (1st Cir. 2001)) (internal quotation marks

omitted) (applying Massachusetts law). The meaning of terms in an

ambiguous contract is often considered a fact question reserved for

a jury. Nadherny v. Roseland Property Co., 390 F.3d 44, 48 (1st

Cir. 2004). Here, the district court found the contract

unambiguous and concluded that Jasty was not required to provide

services to Wright under the contract after November 1, 1999 in

order to receive royalty payments.

Wright points to the agreement's paragraph 2.a. in

support of its argument that the contract is ambiguous. This

paragraph provides that after cessation of the annual payments on

November 1, 1999, "all payments for services . . . shall be

pursuant to paragraph 2.b. (and paragraph 2.d. if applicable)."

One reading of this language is that the contract requires Jasty's

-14-
provision of services after November 1999 in order for him to

continue to be eligible for any payments: royalties under

paragraph 2.b. and IPO payments under 2.d. Another reading,

however, is that, should Jasty provide services after November

1999, he would not be compensated through annual payments (which

would have ceased) but only through continued royalty payments,

and, if Wright went public, the IPO payments. That paragraph 2.a.,

standing alone, could be subject to multiple interpretations is not

the last word, however, as we do not interpret individual contract

provisions in isolation. Mass. v. McAdams Mutual Life Ins. Co.,

391 F.3d 287, 299 (1st Cir. 2005).

When the terms of the contract are read together, they

are unambiguous in providing that Jasty's services were not

required after November 1, 1999. See Nadherny, 390 F.3d at 49

(terms must be construed together as part of "a coherent whole.").

Paragraph 2.b. hinges ten years of royalty payments on the

fulfillment of one condition: the development of an Advance Knee

component for which Jasty has had significant design input. This

is in contrast to paragraph 2.d., which conditions IPO payments on

both the occurrence of an IPO and Jasty's contemporaneous provision

of consulting services.

Wright urges that paragraph 2.a. adds another condition

to royalty payments after November 1999: further services. If

that were so, paragraph 2.a. likewise conditions IPO payments on

-15-
further services. But that interpretation would render

superfluous the explicit language in paragraph 2.d. conditioning

IPO payments on Jasty's providing consulting services.

"[C]onstructions that render contract terms meaningless should be

avoided." Summit Packaging Sys., Inc. v. Kenyon & Kenyon, 273 F.3d

9, 12-13 (1st Cir. 2001). Where services are required in exchange

for compensation, the contract explicitly provides for them. We

are convinced that royalty payments were not conditioned on Jasty's

provision of services after November 1999.7 Wright thus breached

the contract by halting royalty payments at the end of 2001.

Even if we were to assume arguendo that continued

services were required in order for Jasty to be eligible for

royalty payments, Wright faces a second, ultimately insurmountable,

hurdle on the question of notice. Wright argues that it provided

the requisite notice of its intent to terminate the contract, in

response to Jasty's alleged breach, through the meeting and letter

of October 1998.

Generally, "notice must be clear, definite, explicit, and

unambiguous." Seaboard Sur. Co. v. Town of Greenfield, 370 F.3d

215, 223 (1st Cir. 2004) (citing 58 Am. Jur. 2d Notice § 2). Under

7
It is not incongruous to say that Jasty need not have continued to
provide consulting services under the contract in order to be
entitled to royalty payments. After providing "significant design
input," Jasty's entitlement to full royalty payments under the
contract was by no means absolute, as the contract could be
terminated for cause, and his royalty payments jeopardized, if he
were to breach the exclusivity provision.

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Massachusetts law, notice "must state with reasonable certainty the

essential facts required by law or by contract." Id. at 223.8

Here, paragraph 9 permits contract termination for cause upon

thirty-day written notice and opportunity to cure. The October

1998 letter was insufficient under the written notice and

opportunity to cure requirement.

The October 1998 letter does not contain the words

"breach," "terminate," "notice," or any reference to a thirty-day

period. Rather, the letter is forward-looking, discussing specific

future responsibilities that Jasty will undertake, and stating that

Patton, and Wright, "look[ed] forward to being able to continue

this relationship for a long time." While the letter did mention

that Wright considered certain conduct of Jasty's "unacceptable"

and believed it to be "frustrating the very purpose of our

contract," these comments do not convey Wright's intent to

terminate, nor do they provide a thirty-day opportunity for Jasty

to cure -- both required by paragraph 9. We agree with the

8
Wright argues that Tennessee allows an "actual knowledge" standard
for notice that is more lenient than the Massachusetts standard,
and might allow a jury to find that Jasty was on notice of the
proposed termination. But the Tennessee principle of law is more
narrow: that written notice requirements may be waived by a party,
through conduct indicating "an intent to relieve the other of its
duty to comply strictly with the contract." Writzmann v. Baust,
1988 WL 116384, *3 (Tenn. Ct. App. 1988). Jasty did not engage in
conduct that could be construed as waiving his notice rights under
the contract, a point Wright acknowledged at oral argument. We do
not find a relevant distinction here between Massachusetts and
Tennessee law.

-17-
magistrate judge and the district court in concluding that Wright

breached the contract by discontinuing Jasty's royalty payments,

and that even if Wright had not been in breach it did not provide

the required notice of its intent to terminate.9

III. Jasty's Cross-Appeal.

A. Consumer Protection Claims.

Jasty challenges the district court's decision to grant

summary judgment to Wright on the consumer protection claims, Mass.

Gen. Laws ch. 93A and Tenn. Code Ann. § 47-18-01. Jasty alleges

that there is a factual dispute about whether Wright engaged in

"unfair and deceptive" practices, as the consumer protection

statutes forbid.10

Chapter 93A requires a showing of conduct that (1) falls

within "the penumbra of some common-law, statutory, or other

established concept of unfairness"; (2) is "immoral, unethical,

oppressive, or unscrupulous"; and (3) causes "substantial injury to

[consumers or other businesspersons]." Serpa Corp. v. McWane,

Inc., 199 F.3d 6, 15 (1st Cir. 1999) (citing PMP Associates, Inc.

9
Because Jasty's right to recover is clear, we need not address
Wright's contention that the magistrate judge incorrectly
determined that, by continuing to pay Jasty while he was allegedly
in breach, Wright waived any argument that Jasty did not comply
with the contract.
10
Tennessee's consumer protection law is similar to the
Massachusetts statute. Our analysis of the Massachusetts statute
applies equally to the Tennessee statute.

-18-
v. Globe Newspaper Co., 321 N.E.2d 915, 918 (Mass. 1975)) (internal

quotation marks omitted).

Jasty makes three distinct allegations of unfair conduct

by Wright, the most significant of which is his contention that

Wright sought to induce him to engage in unethical and illegal

kickback activities. The other two allegations concern whether

Wright breached the implied covenant of good faith and fair dealing

and whether Wright engaged in economic coercion.

The kickback allegation is rooted in Patton's statement

in the October 1998 letter that he "accept[s] [Jasty's] commitment

to use the Advance Knee in the majority of your knee cases (i.e.,

120 of 150 or so.)"11 Jasty argues that Wright used the October

1998 letter to tie his compensation to his use of Wright products.

Jasty provided documents in support of his claim that

Wright pressured him to engage in kickback activities. He

submitted an affidavit from an expert in medical ethics, stating:

Compensation from a medical device
manufacturer to a physician that is contingent
upon the physician using a medical device
manufacturer's products a certain number of
times, or a substantial amount of time, or at
a volume that the medical device manufacturer,
in its discretion, determines is sufficient,
is unethical.

11
Jasty does not allege that the contract itself is unfair, pointing
to a provision in paragraph 2.b. of the contract designed to
prevent kickbacks ("No royalties will be payable on Products . . .
sold to or used by hospitals at which you maintain privileges.")

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(emphasis added.)12 Jasty also submitted a publication of "Special

Fraud Alerts" from the Department of Health and Human Services'

Office of the Inspector General, 59 Fed. Reg. 65372-01 (Dec. 19,

1994), addressing the Federal Anti-Kickback law. That statue

provides:

[W]hoever knowingly and willfully offers or
pays any remuneration . . . in cash or in kind
to any person to induce such person . . . to
purchase, . . . order or arrange for or
recommend purchasing . . . or ordering any
good, . . . or item for which payment may be
made in whole or in part under a Federal
health care program . . . shall be guilty of a
felony.

42 U.S.C. § 1320a-7b(b)(2). The inspector general publication

clarifies that a payment may be considered improper if "given to a

patient, provider or supplier for . . . recommending or requesting

[a change] from one product to another." In short, compensating

someone in order to induce them to buy or use medical products is

prohibited, as is receiving such compensation. Id. § 1320a-

7b(a)(2).

Thus, Jasty asks us to consider both professional ethical

standards and federal law in evaluating whether Wright engaged in

unfair conduct. We cannot ignore, however, Jasty's own conduct in

light of those same standards. In evaluating a 93A claim, courts

12
The affidavit relies on, inter alia, the American Academy of
Orthopaedic Surgeons Code of Medical Ethics and Professionalism,
American Medical Association Opinion E-8.0501 and the American
Medical Association Principles of Medical Ethics.

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"must evaluate the equities between the parties. . . . [A]

plaintiff's conduct, his knowledge, and what he reasonably should

have known may be factors in determining whether an act or practice

is unfair." Swanson v. Bankers Life Co., 450 N.E. 2d 577, 580

(Mass. 1983). Jasty is bound by the same ethical standards and the

same federal law, and he entered into this arrangement and accepted

both the flat payment and royalty payments until 2001. There is no

evidence on the record that Jasty complained of the terms or

refused to comply. In view of Jasty's own conduct in the matter,

no reasonable factfinder could conclude that Wright violated

Jasty's rights under the consumer protection acts through the

alleged kickback activity.13

We also find insufficient support in the record for

Jasty's remaining two consumer protection claims. The contention

that Wright breached the implied covenant of good faith and fair

dealing by terminating Jasty's contract in September 2001 fails

because withholding payment based on a genuine dispute about what

a contract requires does not violate Chapter 93A. Duclersaint v.

Fed. Nat'l Mortgage Ass'n, 696 N.E.2d 536, 540 (Mass. 1998).

Similarly unavailing is Jasty's argument that Wright engaged in

economic coercion by trying to pressure him to accept less money

than he deserved, in the course of terminating the contract.

13
We also question whether Jasty has suffered any damages from the
alleged practice.

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Wright's conduct between September 2001 and March 2002 may be

viewed as pressuring Jasty to walk away from the contract; however,

a party that simply withholds funds but does not engage in any

other coercive action is not liable under Chapter 93A. See Boston

Pilots v. Motor Vessel Midnight Gambler and East Coast Excursions,

Inc., 357 F.3d 129, 135 (1st Cir. 2004) (defendant's repeated

offerings of settlements of less than plaintiff's view of amount

due under contract "treads close to the line between a sharp-edged

business tactic and an unfair subterfuge," but held not a 93A

violation).

B. Compelled Testimony.

Jasty disputes the district court's decision not to allow

him to compel Wright's damages expert to testify. At the damages

trial, Wright declined to call its expert Elliot Roth, who had been

deposed and designated as a witness expected to testify. Jasty

sought to call Roth as a witness.

A district court's ruling as to whether to compel a

witness to testify is reviewable for an abuse of discretion. See

Gomez v. Rivera Rodriguez, 344 F.3d 103, 114 (1st Cir. 2003).

Specifically, a trial court has discretion to decide whether to

require a witness to testify for an opposing party. See Feliciano

v. Rullan, 378 F.3d 42, 57 (1st Cir. 2004); see also Peterson v.

Willie, 81 F.3d 1033, 1037-38 & n.4 (11th Cir. 1996) ("Once a

witness has been designated as expected to testify at trial, there

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may be situations when the witness should be permitted to testify

for the opposing party . . . . This decision is committed to the

sound discretion of the district court.") In response to Jasty's

attempt to introduce the deposition of the expert into the record,

the court stated, "[compelling the opposing party's expert to

testify] doesn't happen because it doesn't happen . . . an expert

is not just like every other witness and cannot be sort of

conscripted by an opponent." We do not read this as a statement

that the court believed that it lacked authority to require the

witness to testify under any circumstances.

In the absence of any showing of a need for Jasty to call

the witness, we cannot say that the court failed to exercise its

discretion. Furthermore, if there was error it was harmless. See

Feliciano, 378 F.3d at 57 ("We will reverse only if a determination

has unfairly prejudiced the complaining party.") Jasty

acknowledges that the amount of damages actually awarded by the

jury was similar to the lost royalty calculations that Jasty's own

expert had prepared. Roth's damages calculation was lower than

that of Jasty's expert. Thus, there was no prejudice from Jasty's

inability to call Roth to testify.

C. Choice of Law.

Jasty appeals the district court's determination

following the damages trial that Tennessee law should determine the

amount of prejudgment interest Jasty is entitled to, arguing that

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Massachusetts prejudgment interest law should control instead.14

We review choice of law determinations de novo. Reicher v.

Berkshire Life Ins. Co. of Am., 360 F.3d 1, 4 (1st Cir. 2004).15

We first state the undisputed facts and then look to the law of the

forum state for guidance in selecting the appropriate prejudgment

interest rate.

Wright is incorporated in Arlington, Tennessee, and

manufactures components for medical devices in Tennessee. Its

manufacturing processes are based on research and design input from

surgeons all across the country -- efforts that take place both in

Tennessee and elsewhere. The devices are used in surgeries

nationwide. During the relevant period, Jasty was a surgeon,

researcher and Wright consultant living in Massachusetts. He was

a participant in the design process for the Advance Knee, an

14
Under Tennessee law, the award of prejudgment interest is
discretionary, and should be determined in accordance with the
principles of equity. Tenn. Code. Ann. § 47-14-123. Here, the
district court selected the interest rate used in federal civil
actions, "a rate equal to the weekly average 1-year constant
maturity Treasury yield." 28 U.S.C. § 1961(a). Massachusetts, on
the other hand, applies a statutory fixed interest rate of twelve
percent in most cases. Mass. Gen. Laws, ch. 231, §§ 6B-6C. Jasty
argues that under Massachusetts law, he would be entitled to
approximately $650,000 in additional prejudgment interest over the
$138,648 he was awarded.
15
Jasty argues that Wright's conduct waived any argument that
Tennessee law applied. As the choice of law issue did not arise
until after trial, "the issue of choice of law had never been
squarely presented by either party" and thus Wright has not waived
this issue. Levin v. Dalva Bros., Inc., 459 F.3d 68, 72 (1st Cir.
2006).

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endeavor which involved in-person meetings in Tennessee and other

states, as well as meetings over the phone that he participated in

from Massachusetts. Under the contract, Jasty also performed

surgeries using Wright's Advance Knee, and he engaged in studies

and co-authored publications concerning the Advance Knee. The bulk

of these latter activities were conducted by Jasty in

Massachusetts.

The individual contracts of other surgeon-consultants on

the design team were not admitted into evidence. The record is

clear, however, that Jasty and other surgeons negotiated aspects of

their contracts as a unit. For example, there is correspondence

regarding the surgeons' collective desire to include the

termination as-of-right clause in paragraph 9, and to include the

clause providing for payment of royalties in the event of death or

incapacitation, also in that paragraph. Furthermore, there was

evidence that changes to contract provisions were undertaken

collectively during the pendency of the agreement. Specifically,

the record contains discussions about adjustments to royalty rates

that were addressed to all team members. Jasty's contract was

initially drafted in Tennessee and negotiated through the mail.

Jasty signed the contract in Massachusetts, Wright in Tennessee.

Selecting a prejudgment interest rate is a substantive,

rather than a procedural, matter in Massachusetts. Quaker State

Oil Refining Corp. v. Garrity Oil Co., 884 F.2d 1510, 1514 (1st

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Cir. 1989). Massachusetts uses a "functional" approach to choice

of law determinations, in order to establish which state has the

"more significant relationship to the transaction." Hendricks &

Assocs., Inc. v. Daewoo Corp., 923 F.2d 209, 213 n.3 (1st Cir.

1991) (citing Bushkin Assocs., Inc. v. Raytheon Co., 473 N.E.2d

662, 668 (Mass. 1985) (quoting Restatement (Second) of Conflict of

Laws, § 188(1) (1971))). There are three categories of factors to

consider under Bushkin: 1) "contacts," 2) the Restatement § 6(2)

factors and 3) the "Leflar factors." Because some of these factors

are either redundant or not determinative, we focus on

"considerations particularly relevant to the case." Reicher, 360

F.3d at 5 (citing Bushkin, 473 N.E.2d at 670).

We consider first which state has the most significant

"contacts" with the transaction. Bushkin, 473 N.E. 2d at 669.

Contacts may include:

(a) the place of contracting, (b) the place of
negotiation of the contract, (c) the place of
performance, (d) the location of the subject
matter of the contract, and (e) the domicil,
residence, nationality, place of incorporation
and place of business of the parties.

Id. Three of the factors do not tip the balance either way in this

case but two require further analysis: "place of performance" and

"location of subject matter."

The first factor, "place of performance," favors the

application of Tennessee law. While Jasty would perform primarily

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in Massachusetts, he would work outside of Massachusetts with

greater frequency than Wright would work outside of Tennessee.

As to the second factor, the subject matter of the

contract is Jasty's services in connection with development and

marketing of Wright's products. The product components themselves

were designed and manufactured in Tennessee. Specific portions of

the contract suggest that Wright intended significant work to be

performed in Tennessee or at least outside of Massachusetts. The

contract requires Jasty to take "[t]ime away from your practice

necessary to participate in clinical consultant meetings and/or

technical meetings . . . " (paragraph 1.b.); and states that "any

and all development work will be performed, to the extent

necessary, with laboratory and other resources provided by

[Wright], and not the university with which you are affiliated"

(paragraph 3). Though these provisions could be interpreted to

favor either Massachusetts or Tennessee, taken together with place

of performance, they favor the application of Tennessee law.

The Restatement factors reinforce this conclusion. Those

factors are the most relevant of the following "factors" from the

Restatement (Second) of Conflict of Laws, §6(2):

(a) the needs of the interstate and
international systems, (b) the relevant
policies of the forum, (c) the relevant
policies of other interested states and the
relative interests of those states in the
determination of the particular issue, (d) the
protection of justified expectations, (e) the
basic policies underlying the particular field

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 of law, (f) certainty, predictability, and
uniformity of result, and (g) ease in the
determination and application of the law to be
applied.

Restatement (Second) of Conflict of Laws, § 6(2); Bushkin, 473 N.E.

2d at 670. Here, the most relevant factor is "certainty,

predictability and uniformity."16

Wright negotiated contracts with the surgeons on the

design team collectively, at least in part. While each surgeon

would perform some of the services under the contract in his or her

home state, each surgeon also shared a common tie to Tennessee:

design team meetings were often held in Tennessee, development and

refinement of products occurred in Tennessee, and compensation --

annual payments, royalties and IPO payments -- was administered by

Wright in Tennessee. In a situation such as this one, where one

party has contracted for the services of independent contractors

based in different states, there is greater certainty and

predictability for all parties if those contracts, negotiated at

similar times and on similar terms, are all governed by the same

state's laws, rather than by the law of the state where an

16
We do not conclude that the relevant policies and interests of the
states involved represent a decisive factor. Both Tennessee and
Massachusetts have an interest in the calculation of prejudgment
interest. Tennessee's policy vests courts applying its law with
greater discretion to fashion a remedy that fits the circumstances;
Massachusetts' policy treats all litigants similarly by compelling
a particular rate. The states may have different policy goals in
mind, but we are reluctant to take this as an indication that one
state has a greater "interest" than another in setting a
prejudgment interest rate.

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independent contractor happens to live. See Potomac Elec. Power

Co. v. California Union Ins. Co., 777 F. Supp. 968, 973 (D.D.C.

1991) (in liability insurance context, "common sense suggests that,

knowing of the potential for claims in any number of states . . .

the parties would consider the insured's principal headquarters as

the one jurisdiction which ties all potential parties together.").

The application of Tennessee law thus better serves the interest of

"certainty, predictability and uniformity."17

We agree with the district court's conclusion that

Tennessee's prejudgment interest law should control Jasty's damages

award.18

IV. Conclusion.

The entry of summary judgment in favor of Jasty on his

breach of contract claim and on his opposition to Wright's

counterclaims is affirmed. The entry of summary judgment for

Wright on Jasty's consumer protection claims, and the denial of

17
The third category involves the "Leflar factors." Bushkin, 473
N.E. 2d at 670 n.7 (quoting R.A. Leflar, American Conflicts Law 195
(3d ed. 1977)). These factors do not add to our analysis in this
case.
18
Jasty also argues that the Tennessee Supreme Court's holding in
Otis v. Cambridge Mut. Fire Ins. Co., 850 S.W.2d 439, 446-47 (Tenn.
1992) precludes the use of compound interest in prejudgment
interest awards. In Otis, the court struck down a prejudgment
interest award set at ten percent compounding interest, not because
of the compounding, but because the award exceeded the state's
statutory cap on prejudgment interest of ten percent (simple)
interest per annum. Id. at 447; see also Tenn. Code Ann. § 47-14-
123. Jasty does not allege that the award here exceeded that cap.

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Wright's summary judgment motion on Jasty's breach of contract

claim, is affirmed.

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