Filed 2/26/13 Ischemia Research and Ed. Found. v. Pfizer, Inc. CA6
                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                      SIXTH APPELLATE DISTRICT


ISCHEMIA RESEARCH AND                                                H034653
EDUCATION FOUNDATION,                                               (Santa Clara County
                                                                     Super. Ct. No. CV026653)
         Plaintiff and Appellant,

         v.

PFIZER INC., et al.,

         Defendants and Appellants.



         Plaintiff Ischemia Research and Education Foundation (IREF) appeals from the
trial court‟s order granting a new trial to defendant Pfizer Inc. (Pfizer) on liability and
defendant Dr. Ping Hsu (Hsu) on damages after a jury returned a $38 million verdict in
IREF‟s favor in IREF‟s misappropriation of trade secrets action against Pfizer and Hsu.
IREF contends that (1) the trial court‟s order is void because the statutory period for
ruling on the new trial motions had expired before the court issued its order, (2) the
statutory provision permitting a trial court to grant a new trial for insufficiency of the
evidence is unconstitutional, (3) the trial court‟s order was an abuse of discretion, and (4)
the trial court‟s decision not to award exemplary damages (an issue upon which it granted
IREF a new trial) was an abuse of discretion. Pfizer and Hsu have filed protective cross-
appeals. We reject IREF‟s contentions and affirm the trial court‟s order. Therefore, we
need not address the cross-appeals.
                                  I. Factual Background
       IREF is a nonprofit corporation that collects and analyzes data from clinical trials,
which it stores in databases. Dr. Dennis Mangano is a physician, the founder of IREF,
and its “principal scientist.” Beginning in 2001, he also served as IREF‟s chief executive
officer (CEO). Mangano is very experienced in conducting clinical trials. There are
three types of clinical trials. A pharmaceutical company may sponsor a trial; the National
Institutes of Health (NIH) may sponsor a trial; or an independent entity, such as IREF,
may initiate a trial. Mangano formed a group of physician investigators, called McSPI,
who represented the leading cardiac surgery centers. McSPI is an acronym for multi-
center study of perioperative ischemia. Perioperative means before, during, or after
surgery. Ischemia refers to an organ‟s lack of oxygen. Mangano‟s plan was to have
these investigators contribute data to a database.
       The McSPI investigators joined together and did an observational study of 2,417
                                                       1
cardiac artery bypass graft (CABG) surgery patients. An observational study simply
observes the history of patients as they go through surgery and during their
hospitalization thereafter, while a clinical trial tests a drug or technique. The McSPI
investigators collected 3,000 pieces of data per patient in this study, and this data was
used to create a database called EPI-1. “EPI” stands for epidemiology. It took IREF two
years to input and check the accuracy of this data. EPI-1 was owned by IREF, and no
other database contained this type of information at this level of detail. After all of the
data was inputted and checked, the EPI-I database was “locked” so that it could provide a
basis for publishable work. EPI-1 was locked in 1995.
       Clinical trials of a drug called acadesine were conducted by IREF between 1990
and 1994. Acadesine was intended to help the body protect itself from a heart attack.
The clinical trials of acadesine involved CABG patients. IREF was paid $30 million by

1
       There were 24 centers, and each of them observed approximately 100 patients.

                                              2
Gensia, the developer of acadesine, to do these clinical trials of the drug. IREF also
                                                              2
received the right to publish the research without constraints. IREF‟s agreements
provided that IREF would have joint ownership over the placebo data, which involved
2,700 patients. The acadesine studies collected 2,000 pieces of data per patient. IREF
was granted the right to the acadesine databases created from these clinical trials, which
                                                      3
included all 4,000 patients involved in the trials.
       IREF participated in a second observational study of CABG patients known as the
EPI-2 study. The EPI-2 observational study was a worldwide, 70-center study of over
5,000 CABG patients in 17 countries that collected more than 11,000 pieces of data per
patient. The EPI-2 database was locked in late 2001. There are no other databases in the
world that contain this kind of information.
       IREF stored all of its databases on a server, which was kept in a locked room and
was password-protected. This server contained the EPI-1 database, the EPI-2 database,
                               4
and the acadesine databases.
       Pfizer is a pharmaceutical company. In 1999, Pfizer5 was developing two drugs,
parecoxib and valdecoxib. Valdecoxib was also known by the brand name Bextra.
Bextra and parecoxib are nonsteroidal anti-inflammatory drugs (NSAIDs) called COX-2


2
     IREF always insisted on the right to publish the research it did on behalf of a
company.
3
        Mangano testified at trial that Schering-Plough owned the acadesine databases
“with rights to publish by IREF.” He explained that Schering-Plough had acquired
ownership of the databases in 2007 with the exclusion of the rights involved in this
litigation.
4
       There are five acadesine databases.
5
        The original developer of parecoxib and Bextra was Searle, which merged with
Pharmacia and then became part of Pfizer. Although the entity involved was, at some
points, Searle, and, at other points, Pharmacia, Pfizer is the entity that inherited any
liability. For ease of reference, we will refer to the developer of parecoxib and Bextra as
Pfizer regardless of whether it was actually Searle or Pharmacia at the time in question.

                                               3
           6
inhibitors. Pfizer wanted to be able to market Bextra and parecoxib to be used for acute
pain, such as after surgery. The United States Food and Drug Administration (the FDA)
requires clinical trials of drugs before it will consider approving them. Clinical trials are
done to determine both whether a drug is effective and whether it has dangerous side
effects.
       Pfizer contracted with IREF in 1999 and paid IREF more than $4 million for
IREF‟s assistance in designing and conducting one of Pfizer‟s studies of Bextra and
parecoxib. This study was a clinical trial called CABG I that was conducted in 2000.
The CABG I contract obligated IREF to utilize its databases to provide responses to
questions from Pfizer regarding CABG I. IREF referred to this as “productive access” to
its databases. Under its contract with Pfizer, IREF received the right to the placebo data
and the right to publish the results of the study, as was IREF‟s normal practice to require.
CABG I was conducted using McSPI. Over $2 million of the money paid to IREF by
Pfizer went to the McSPI investigators. The amount that IREF retained amounted to
$4,368 per patient. Pfizer employee Dr. Richard Charles Hubbard was in charge of
CABG I, and Pfizer employee Dr. Michael Snabes was also involved in CABG I.
                                                            7
       Hsu was an employee of IREF from 1999 to 2004. Hsu was a biostatistician, and
he served as IREF‟s director of biometrics. When he began working for IREF, he signed


6
        Parecoxib is a slightly different form of the same molecule in Bextra. Parecoxib is
given as an injection, while Bextra is given in tablet form. Once the body metabolizes
them, they are identical. COX stands for “Cyclooxygenase.” Traditional NSAIDs are
nonselective, which means that they inhibit both COX-1 and COX-2. COX-2 inhibitors
are NSAIDs that are selective and inhibit only COX-2. COX-1 is an enzyme that protects
the lining of the stomach. Thus, the potential advantage of a COX-2 inhibitor is that it
possibly would not damage the stomach‟s lining.
7
      During part of that time, Hsu actually worked for Gentiae. Until 2001, Gentiae
was an unincorporated division of IREF. In 2001, Gentiae was incorporated and became
IREF‟s wholly owned, for-profit subsidiary. IREF and Gentiae often worked together.
During the relevant time period (2002 to 2004), Hsu was employed by IREF. After 2003,

                                              4
an agreement promising to protect the confidentiality of IREF‟s intellectual property.
Hsu worked on CABG I and participated in the analysis and drafting of IREF‟s
manuscript on CABG I.
       CABG I studied 462 patients, 311 of whom received the drugs, and 151 of whom
received the placebo. As a result of CABG I, the FDA had concerns about adverse events
                                      8
associated with parecoxib and Bextra. These concerns were heightened by the
controversy at that time over the risks associated with a drug called Vioxx, which was
another COX-2 inhibitor. In July 2001, the FDA notified Pfizer that it would not approve
parecoxib without further studies due to concerns about the drug‟s effectiveness and
safety. Bextra was approved by the FDA for arthritis and menstrual pain, and Pfizer
began marketing it in 2001. Bextra was not approved for acute pain. CABG I had
“demonstrated an excess of serious adverse events, including death,” associated with
parecoxib and Bextra. Pfizer needed to do further studies if it wanted to obtain approval
of parecoxib and approval of Bextra for acute pain.
       IREF submitted a manuscript for publication of the CABG I results in November
                                                                            9
2001, but IREF‟s manuscript was not ultimately published until June 2003.


Gentiae became partially owned by entities other than IREF. Gentiae‟s business was
running clinical trials.
8
        Adverse events are “everything bad that happens to a patient” during the course of
a clinical trial. Not all adverse events are considered in the results of a clinical trial.
Only those adverse events that are “adjudicated” by a committee as clinically relevant
adverse events (CRAEs) are considered. CRAEs are supposed to be those adverse events
that potentially could have been related to the study drug. For instance, an adverse event
occurring before the drug or placebo is administered would not be considered a CRAE.
The CRAE committee is independent of the drug sponsor. Mangano was concerned that
many of the adverse events that occurred during CABG I had been discounted and not
reported as CRAEs.
9
       According to Mangano, Pfizer was “very, very angry” when IREF decided to
publish the results of CABG I. Indeed, Pfizer was concerned about the manuscript and
was considering how it could counter the manuscript‟s assertions. However, these issues

                                             5
       In December 2001, Pfizer approached IREF about participating in another clinical
trial of parecoxib and Bextra. This new study, which would be called CABG II, would
need to be a much larger version of CABG I. On January 9, 2002, both Hubbard, who
was in charge of designing CABG II for Pfizer, and Mangano participated in a telephone
conference during which possible outcomes of a three to five-arm CABG II, potentially
including an NSAID-comparator arm, were discussed.
       Mangano told Pfizer that IREF would charge about $10,000 per patient for IREF‟s
help in designing the protocol for CABG II. A study protocol is a “roadmap” for the
conduct of the study. He recommended that the trial would need to be “event-driven”
and therefore continue to enroll patients until there were “a certain number of adverse
events.” Pfizer preferred to have a “fixed number of patients.” Given that preference,
Mangano recommended that they would need to enroll at least 4,500 patients in the trial.
Mangano anticipated that an “intensive two-week effort” would be required of IREF to
help design the study protocol.
       In mid-January 2002, Mangano sent to Pfizer a proposed contract for the CABG II
study. The contract proposed for IREF to assist Pfizer in the design of the study by using
information from IREF‟s EPI-1 and EPI-2 databases. The EPI-2 database had a large
amount of information about other NSAIDs. IREF was not willing to agree to a database
access only or “a la carte” deal. IREF did not offer to provide productive access to the
                       10
acadesine databases.        Mangano proposed that Pfizer pay IREF $10,081 per patient,
which was anticipated to amount to about $15 million to $25 million for the 1,500 to
2,500 patients in the study. Mangano based the $10,081 amount on prior studies where


were apparently resolved in early December 2001 to the satisfaction of all. Eventually,
everyone agreed on the content of the manuscript, and IREF and Pfizer employees were
co-authors.
10
      According to Mangano, IREF would have charged another $12,500 per patient for
productive access to the acadesine databases.

                                               6
IREF had been paid between $4,500 and $32,000 per patient. The proposed contract also
provided that IREF would receive the placebo data and publication rights. IREF‟s
involvement would only be on the front end, and the entire study would be over in less
than a year.
       In late January 2002, while negotiations were underway between IREF and Pfizer,
Hubbard asked Mangano “about the possibility of probing IREF‟s databases for
information regarding NSAIDs.” Apparently, Mangano did not reply. At the time of
Hubbard‟s inquiry, Pfizer and the FDA were negotiating about whether there should be
an NSAID-comparator arm in the CABG II study. By the end of January, Pfizer and the
                                                          11
FDA had decided not to have an NSAID-comparator arm.
       In late January 2002, Hubbard told Mangano that Pfizer would not accept the
initial IREF proposal. Negotiations continued between IREF and Pfizer and included
IREF‟s for-profit subsidiary Gentiae. IREF submitted a new, more limited proposal,
which still included productive access to the databases, and would have charged Pfizer
$5,525 per patient. Pfizer did not accept this proposal either. But they continued to
negotiate in February 2002.
       Pfizer sent the FDA a study protocol on February 14, 2002. This protocol
contemplated two arms, one with parecoxib/Bextra, and the other a placebo arm, with
500 patients per arm. By February 18, Pfizer had decided that it did not need access to
IREF‟s databases. Another proposal was made by IREF that would have involved a
payment of $3,628 per patient. This too was rejected by Pfizer. Ultimately, at the end of
February, Pfizer accepted a more limited proposal from Gentiae for $1,853,000 that did




11
       The reason for this decision was that the only intravenous NSAID available to use
as a comparator had “high risks” and “extensive limitations to its use.” That NSAID also
could not be used with aspirin, which would be used in CABG II.

                                             7
not involve database access. Although the final contract was with Gentiae, Mangano was
involved in Gentiae‟s work on CABG II.
       In early March 2002, Hubbard contacted Hsu about serving on Pfizer‟s
independent data monitoring committee (IDMC) for CABG II. An IDMC is usually
                                                          12
necessary for a blinded clinical trial such as CABG II.        The purpose of an IDMC is to
serve as an independent “watchdog” over the trial. The members of the IDMC are
experts who do not work for the company that is conducting the trial.
       In April 2002, Mangano learned from Hsu that Hsu had been asked by Pfizer to
serve on the IDMC for CABG II. Mangano thought it would be a good opportunity for
Hsu to “support his career,” and he viewed Hsu‟s role as “extremely narrow” because an
IDMC reviews the data only “as it drips down from the study.” Mangano believed that
Hsu‟s service on the IDMC would consume only an hour or two per month. Because an
IDMC is supposed to be independent of the company conducting the trial, Mangano did
not expect Hsu to have any contact with Pfizer. Mangano told Hsu that he should submit
his IDMC contract with Pfizer to the IREF board for its review. Mangano also reminded
Hsu in writing that he “cannot use any of IREF‟s intellectual property for [Pfizer‟s]
purpose.” Mangano told Hsu that he could “not say anything about the databases,
period.” Hsu told Mangano that he would comply with these conditions, but he never
submitted his contract to the IREF board.
       In April 2002, Hsu sent an e-mail to several Pfizer employees including Snabes,
who was serving as one of Pfizer‟s study directors on CABG II, and Hubbard informing
them that he was available to serve on the IDMC. Hsu told them in this e-mail: “I cannot
use IREF‟s intellectual property for [Pfizer‟s] purpose.” Snabes responded: “One area in
this regard is that we were considering being able to take advantage of your access to the


12
       A blinded clinical trial is one in which no one involved in the trial knows which
patients are receiving the placebo.

                                             8
IREF databases when we are looking at AE [adverse event] rates. So are you saying that
this now OFF the table as an option.” Hsu responded: “If you need advice on where to
find the data to answer your question, I can provide that to you. If you want [an] opinion
on the usefulness of certain databases, I can provide that too i.e. whatever I know. If you
want to access IREF databases, you will need to include that in the contract with
IREF/Gentiae.”
       Pfizer continued to revise its study protocol over the next six months. In
September 2002, a Pfizer employee sent an e-mail to Hsu and two other IDMC members
seeking data about the expected rate of adverse events one day after surgery in a
population similar to that being studied in CABG II, which was part of the population
studied in EPI-2. Hsu responded that this analysis could be done only from the EPI-2
database. Hsu suggested that Pfizer look at Mangano‟s published aspirin paper. In 2002,
Mangano had published an article in the New England Journal of Medicine about aspirin
and mortality in CABG surgery. This article was based on the EPI-2 database. Hsu also
said in his e-mail that he “will bring that statistics with me, hopefully it will be helpful.”
The aspirin paper did not contain statistics regarding the expected rate of adverse events
in this population.
       Pfizer proceeded with its CABG II clinical trial and ultimately enrolled 1,671
                                               13
patients in the study, which had three arms.        The third arm was placebo/Bextra. In May
2003, Pfizer inquired of Mangano whether IREF would be interested in writing a
manuscript using IREF‟s EPI-2 database. IREF had done something similar for another
pharmaceutical company for $3 million. IREF sent a proposal to Pfizer offering to do so




13
       The ultimate result of the study was that neither drug was approved for acute pain
due to a statistically significant number of adverse cardiovascular events. Bextra was
ultimately withdrawn from the market at the recommendation of the FDA in 2005 due to
reports of serious, life-threatening skin reactions.

                                                9
for $7.5 million. Pfizer, which wanted IREF‟s assistance “for free,” did not respond to
IREF‟s proposal.
       In September 2003, Hsu asked for and received a raise from IREF. Shortly
thereafter, he sought to establish a system of bonuses. After the salary and bonus issues
were resolved, Hsu sought an ownership interest in the company that was developing
acadesine. That company, AGTC, was owned by Mangano and his wife. IREF had done
some work for AGTC, for which AGTC reimbursed IREF. Mangano became irritated at
the tone of Hsu‟s requests, even though Mangano was amenable to the substance of them.
In October 2003, Hsu performed paid consulting work for another company without
IREF‟s knowledge. In December 2003, unbeknownst to IREF and Mangano, Hsu
entered into a consulting agreement with another company.
       In late 2003 and early 2004, Mangano and Hsu engaged in a series of heated
e-mail exchanges. On February 4, 2004, Hsu sent an e-mail to many of the McSPI
investigators implicitly accusing IREF of improprieties and stating that he would be
leaving his job at IREF on February 13, 2004. When Mangano learned of this e-mail, he
was angry. On the night of February 5, Mangano went into Hsu‟s IREF office and
looked at Hsu‟s desktop computer to see what else Hsu had sent to McSPI investigators.
The computer had been left on, and Mangano did not need a password to access it.
Mangano discovered, to his surprise, “a lot of e-mail traffic with Pfizer.” Looking more
closely, Mangano found that Hsu‟s computer contained files that appeared to be
                                                                        14
associated with Pfizer that contained analyses of the EPI-2 database.        These files were
from February and August 2002. Some of the analyses on Hsu‟s computer concerned
NSAID use in CABG patients. Hsu had been communicating by e-mail with Snabes and


14
       One of these files was a “power analysis.” A “power analysis” attempts to “use
information available before the study starts to predict what the outcomes of the study
may be and then calculate how many patients need to be enrolled in the study in order to
prove that the outcome is the one you wanted.”

                                            10
Hubbard throughout this period. Mangano had an IT person download Hsu‟s files so that
he could examine them in more detail.
          On February 17, 2004, Mangano set up a meeting with Hsu for the following day.
At the meeting, Mangano asked Hsu to explain his interactions with Pfizer. Hsu did not
provide satisfactory answers. Mangano placed Hsu on paid administrative leave. On
February 21, 2004, Hsu burned numerous “business” files from his laptop computer to
CD and deleted more than 200 files from his laptop computer. Hsu also deleted a folder
of files on IREF‟s server. In addition, Hsu attempted to delete the CD creation logs from
February 21 by placing the log files in the recycle bin. One of the files that was deleted
and burned to a CD was called “EPI-2 summary.doc.” Another file was called “Searle
                                                           15
1.doc” and a third was called “EPI-2 sum-Searle.doc.”           The “Searle 1.doc” had been
created in August 2002, at a time when Hsu would have had no legitimate reason to be
probing EPI-2 for that information.
          Mangano terminated Hsu‟s employment after he came to the conclusion that Hsu
“was effectively stealing data from the foundation, from our principal databases, the gold
of the foundation, and using it to help Pfizer in a study of a major drug, Bextra.” Hsu had
taken data from the EPI-1, EPI-2, and acadesine databases. Mangano believed that Hsu‟s
probing of IREF‟s databases and communications with Hubbard tracked Pfizer‟s
development of its protocol for CABG II. Mangano also concluded that Hsu had used
IREF‟s database to analyze other issues that were being considered by the IDMC and by
Pfizer.




15
          As noted earlier, Searle was Pfizer‟s predecessor in interest.

                                                11
                               II. Procedural Background
       In 2004, IREF and Mangano filed an action against Pfizer and Hsu for
misappropriation of trade secrets. In October 2007, Mangano executed a written
assignment of his rights in this litigation to IREF.
       At Pfizer‟s request, the trial court bifurcated the issue of the amount of exemplary
damages.
       IREF‟s expert Sam Leopold Teichman testified at trial that the IREF data accessed
by Hsu would have been useful to Pfizer in connection with CABG II. IREF‟s damages
expert Jimmy Joe Jackson testified at trial as an expert on the quantification of damages.
Jackson asserted that Pfizer would have paid $14.7 million for productive access to
IREF‟s EPI-1 and EPI-2 databases in 2002 if it had not misappropriated information from
those databases. He also opined that Pfizer would have paid an additional $15 million for
                                                                              16
productive access to those databases during a 10-month “extension” in 2003.        Jackson
further testified that Pfizer would have paid $16 million for productive access to the
acadesine databases. Jackson also valued the “lost placebo data” that IREF would have
obtained if it had contracted with Pfizer at $8 million. He made no attempt to determine
a damages figure that did not combine the damages attributable to the conduct of both
Hsu and Pfizer. Pfizer‟s damages expert Alan Ratliff testified that, if Pfizer was found
liable, IREF‟s damages “would be a range somewhere between [$]100,000 and
[$]330,000.”
       At the close of evidence, Pfizer and Hsu moved for a directed verdict, but the
court denied their motions. The jury returned a special verdict in favor of IREF. It
unanimously found that both Hsu and Pfizer had misappropriated IREF‟s trade secret




16
       The original proposal by IREF in January 2002 covered only that calendar year.

                                             12
                                                                                17
databases in February 2002. The jury set the damages at over $38 million.            The
damages findings were not unanimous; the jury voted 10-2. The jury also found by clear
and convincing evidence that the misappropriation by both Pfizer and Hsu was “willful
and malicious.” The jury was unanimous on this finding as to Hsu but voted 10-2 as to
Pfizer.
          In January 2009, IREF filed a motion seeking exemplary damages under Civil
Code section 3426.3, subdivision (c). In March 2009, the court denied the motion. On
May 5, 2009, the court entered judgment. The judgment provided that IREF would
recover from Pfizer and Hsu “jointly and severally” more than $38 million plus
prejudgment interest of more than $19 million.
          All parties sought a new trial.18 The trial court issued an order vacating the
judgment, granting Pfizer‟s motion for a new trial on liability, granting Hsu‟s motion for
a new trial on damages, and granting IREF‟s motion for a new trial on exemplary
damages. IREF timely filed a notice of appeal from the trial court‟s order granting the
new trial motions and from the judgment “insofar as the Judgment fails to award
exemplary damages . . . .” Pfizer timely filed a notice of cross-appeal from the new trial
order and the judgment. Hsu timely filed a notice of cross-appeal from the court‟s order
denying his JNOV motion and from the judgment.



17
        In answer to the question: “Did IREF suffer any actual loss or was Pfizer unjustly
enriched?” the jury responded affirmatively. The jury specially found that the
misappropriation was a substantial factor in “causing actual loss to IREF or unjust
enrichment to Pfizer” and that the actual loss to IREF was over $38 million. The jury
was also asked: “Without double counting any actual loss damages you awarded (if
any) . . . , by what amount (if any) was Pfizer unjustly enriched by the misappropriation
of IREF‟s trade secrets?” The jury responded that it was no amount.
18
        At the same time, Hsu and Pfizer also served and filed notices of intent to move
for judgment notwithstanding the verdict (JNOV). These motions were denied and are
not at issue on appeal.

                                                13
                                       III. Discussion
                            A. Timeliness of New Trial Order
                                       1. Background
       Mangano was a party to this lawsuit when it was filed in 2004, but he assigned his
rights to IREF in October 2007. IREF filed a notice of this assignment with the court in
October 2007. The notice stated that “this action shall continue with IREF as the sole
Plaintiff.” During voir dire in 2008, the court and the parties discussed the fact that
Mangano had assigned his interest in this action to IREF but had not yet been
“formally . . . dismissed as a party.” The court then orally ordered that “Mangano will be
dismissed as a plaintiff. The remaining plaintiff will be [IREF].” Mangano testified at
trial that he had assigned all of his rights in this action to IREF in October 2007. He
testified: “I‟ve dropped out of this as a plaintiff. I assigned everything to the
foundation.” Mangano was not listed as a plaintiff on the jury‟s special verdict forms.
       On May 5, 2009, the court entered judgment in favor of IREF. The clerk of the
superior court filed a proof of service of the judgment on that date stating that “a true
copy of” the judgment “was served” on the parties.
       At a May 8, 2009 hearing, the court said: “You all received a copy of the
judgment that I cranked out ultimately a little earlier this week, I believe. I do want to
state for the record that I did not order the clerk to send out a notice of entry of judgment.
That was not a notice of entry of judgment; that was just a service of the judgment on the
parties. [¶] So I believe that one of the things we‟re going to be talking about this
morning is the timing for the filing of any motions for new trial. And so at this point
there has been no notice of entry of judgment prepared or served. . . . [¶] My concern, of
course, here, ultimately is that once a notice of intention to move for new trial is filed, the
Court only has 60 days in which to rule on those motions. So, at this point, I guess I can
ask the plaintiff: Has a notice of entry of judgment been sent out?” IREF‟s attorney
replied: “It hasn‟t been done.”

                                              14
       The court proceeded to discuss scheduling. “Do we want to talk about a schedule
for a hearing on the motions for new trial? I mean, at this point we don‟t know precisely
when the last day is going to be. But if you indicate you‟re going to mail your notice of
entry of judgment no later than Monday, I believe a notice of intention to file a motion
for new trial has to be filed within 15 days of the date of the service of the entry of
judgment; so I think that‟s 15. If it‟s going to be served by mail, it would be 20 days. [¶]
. . . I just want to make sure the hearing date is scheduled so that I have enough time to
consider everything that‟s raised at the hearing before I have to rule.” The attorneys
agreed to “try to work out something that coordinates” with the court‟s schedule, which
was limited.
       On May 20, 2009, the parties stipulated in writing to a schedule for posttrial
motions, which was approved by the court. This stipulation provided that IREF “will
serve its notice of entry of judgment on June 1, 2009 (which will trigger the 60-day
deadline in CCP § 660 and the filing deadline for IREF‟s memorandum of costs and
motion for attorneys fees).” It further identified the dates upon which the notices of
intent and the motions for new trial and JNOV would be filed by each party. Finally, it
provided that the court “will hold oral argument on July 17, 2009” and “will have
jurisdiction to render its decisions until July 31, 2009 (the last of 60 days allowed under
CCP § 660).”
       On June 1, 2009, IREF filed and served a notice of entry of judgment on counsel
for Hsu and Pfizer. On June 16, 2009, both Pfizer and Hsu filed and served separate
notices of intent to move for a new trial. On June 26, 2009, IREF also filed and served a
notice of intent to move for a new trial. The court held oral argument on the motions on
July 17, 2009. At the end of the hearing, the court asked: “And what‟s my -- what are
my deadlines, here? I know I have a deadline on the motion for new trial. Is that the end
of this month?” Pfizer‟s attorney replied: “July 31st, Your Honor.” Hsu‟s attorney
agreed. IREF‟s attorney said nothing.

                                              15
       On July 30, 2009, the trial court issued an order vacating the judgment, granting
Pfizer‟s motion for a new trial on liability, granting Hsu‟s motion for a new trial on
damages, and granting IREF‟s motion for a new trial on exemplary damages.
                                        2. Analysis
       “Except as otherwise provided in Section 12a of this code, the power of the court
to rule on a motion for a new trial shall expire 60 days from and after the mailing of
notice of entry of judgment by the clerk of the court pursuant to Section 664.5 or 60 days
from and after service on the moving party by any party of written notice of the entry of
the judgment, whichever is earlier, or if such notice has not theretofore been given, then
60 days after filing of the first notice of intention to move for a new trial. If such motion
is not determined within said period of 60 days, or within said period as thus extended,
the effect shall be a denial of the motion without further order of the court.” (Code Civ.
Proc., § 660, italics added.)
       Code of Civil Procedure section 664.5 provides: “(a) In any contested action or
special proceeding other than a small claims action or an action or proceeding in which a
prevailing party is not represented by counsel, the party submitting an order or judgment
for entry shall prepare and mail a copy of the notice of entry of judgment to all parties
who have appeared in the action or proceeding and shall file with the court the original
notice of entry of judgment together with the proof of service by mail. This subdivision
does not apply in a proceeding for dissolution of marriage, for nullity of marriage, or for
legal separation. [¶] (b) Promptly upon entry of judgment in a contested action or
special proceeding in which a prevailing party is not represented by counsel, the clerk of
the court shall mail notice of entry of judgment to all parties who have appeared in the
action or special proceeding and shall execute a certificate of such mailing and place it in
the court‟s file in the cause. [¶] (c) For purposes of this section, „judgment‟ includes any
judgment, decree, or signed order from which an appeal lies. [¶] (d) Upon order of the



                                             16
court in any action or special proceeding, the clerk shall mail notice of entry of any
judgment or ruling, whether or not appealable.” (Code Civ. Proc., § 664.5, italics added.)
       IREF‟s contention is that the trial court‟s ruling on the new trial motion was void
because the clerk‟s May 5, 2009 mailing of the judgment to the parties was a “notice of
                                                                         19
entry” under subdivision (b) of Code of Civil Procedure section 664.5.        The clerk would
have been required to give notice under Code of Civil Procedure section 664.5,
subdivision (b) only if there was “a prevailing party . . . not represented by counsel” at the
time of judgment. IREF claims that Mangano was, at the time of judgment, a prevailing
party not represented by counsel.
       IREF disputes the effectiveness of the trial court‟s 2008 oral order dismissing
Mangano as a party on the ground that a written order is required. IREF therefore claims
that Mangano remained a party at the time of judgment due to the absence of a written
order dismissing him from the action. Assuming arguendo that Mangano was a party
unrepresented by counsel at the time of the judgment, IREF‟s claim still cannot succeed
because Mangano was not a “prevailing party” at the time of judgment. The jury did not
return a verdict in favor of Mangano, and the court did not enter judgment in favor of
Mangano. IREF argues that Mangano would qualify as a “prevailing party” if those
words were given a “practical definition.” None of the authorities cited by IREF on this
point concerned the requirements of Code of Civil Procedure section 664.5,
subdivision (b). Since the clerk, unlike a court, is performing a ministerial duty based on
the face of the judgment, IREF‟s proposed “practical” approach to the meaning of
“prevailing party” would create an impossible burden on the clerk. Code of Civil
Procedure section 664.5, subdivision (b) could only be referring to the party who prevails



19
       IREF seemingly acknowledges that the trial court did not “order” the clerk to mail
notice of entry of judgment. The only evidence in the record on this point is the trial
court‟s express denial that it had ordered the clerk to do so.

                                             17
on the face of the judgment. Because Mangano did not prevail on the face of the
judgment, he was not a prevailing party for purposes of Code of Civil Procedure section
664.5, subdivision (b), and the clerk was not required to give notice of entry of judgment.
Consequently, the premise for IREF‟s jurisdictional contention is absent, and its
contention fails.


              B. Constitutionality of Code of Civil Procedure Section 657
       Code of Civil Procedure section 657 provides that a new trial may be granted on
the ground of “[i]nsufficiency of the evidence to justify the verdict or other
decision . . . .” “A new trial shall not be granted upon the ground of insufficiency of the
evidence to justify the verdict or other decision . . . unless after weighing the evidence the
court is convinced from the entire record, including reasonable inferences therefrom, that
the court or jury clearly should have reached a different verdict or decision. [¶] . . . [I]f
the motion is granted[, the order] must state the ground or grounds relied upon by the
court, and may contain the specification of reasons.” An order granting a new trial on the
ground of insufficiency of the evidence “shall be reversed as to such ground only if there
is no substantial basis in the record for any of such reasons.” (Code Civ. Proc., § 657.)
       IREF contends that Code of Civil Procedure section 657‟s provision for the
granting of a new trial based on insufficiency of the evidence is an unconstitutional
violation of its right to a jury trial. “It has long been held that the right to jury trial is not
violated by the power in question.” (Clemmer v. Hartford Insurance Co. (1978) 22
Cal.3d 865, 889 [rejecting claim under both the California and United States
Constitutions].) When the California Supreme Court rejected this contention in 1915, it
noted that the contention had been repeatedly rejected previously. (In re Estate of
Bainbridge (1915) 169 Cal. 166, 167-168 [under California Constitution]; Ingraham v.
Weidler (1903) 139 Cal. 588, 589-590 [same]; see also Fortenberry v. Weber (1971) 18
Cal.App.3d 213, 224 [rejecting contention under United States Constitution].) As we are

                                                18
bound by the California Supreme Court‟s repeated holdings on this point over the last
century (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455), we need
not further address IREF‟s contention.


                                      C. Merits of Order
                                    1. Standard of Review
       “The standards for reviewing an order granting a new trial are well settled. After
authorizing trial courts to grant a new trial on the grounds of „[e]xcessive . . . damages‟ or
„[i]nsufficiency of the evidence,‟ section 657 provides: „[O]n appeal from an order
granting a new trial upon the ground of the insufficiency of the evidence . . . or upon the
ground of excessive or inadequate damages, . . . such order shall be reversed as to such
ground only if there is no substantial basis in the record for any of such reasons.‟ (Italics
added.) Thus, we have held that an order granting a new trial under section 657 „must be
sustained on appeal unless the opposing party demonstrates that no reasonable finder of
fact could have found for the movant on [the trial court‟s] theory.‟ [Citation.] Moreover,
„[a]n abuse of discretion cannot be found in cases in which the evidence is in conflict and
a verdict for the moving party could have been reached . . . .‟ [Citation.] In other words,
„the presumption of correctness normally accorded on appeal to the jury‟s verdict is
replaced by a presumption in favor of the [new trial] order.‟ [Citation.] [¶] The reason
for this deference „is that the trial court, in ruling on [a new trial] motion, sits . . . as an
independent trier of fact.‟ [Citation.] Therefore, the trial court‟s factual determinations,
reflected in its decision to grant the new trial, are entitled to the same deference that an
appellate court would ordinarily accord a jury‟s factual determinations. [¶] The trial
court sits much closer to the evidence than an appellate court. Even the most
comprehensive study of a trial court record cannot replace the immediacy of being
present at the trial, watching and hearing as the evidence unfolds. The trial court,
therefore, is in the best position to assess the reliability of a jury‟s verdict and, to this end,

                                                19
the Legislature has granted trial courts broad discretion to order new trials. The only
relevant limitation on this discretion is that the trial court must state its reasons for
granting the new trial, and there must be substantial evidence in the record to support
those reasons. [Citation.]” (Lane v. Hughes Aircraft Co. (2000) 22 Cal.4th 405, 411-412
(Lane).) “[S]o long as the evidence can support a verdict in favor of either party—a
properly constructed new trial order is not subject to reversal on appeal.” (Lane, at
p. 414.)
                               2. The Trial Court’s Reasons
       Pfizer‟s new trial motion contended, among other things, that there was
insufficient evidence to support the jury‟s verdict and that the damages were excessive.
Hsu‟s new trial motion asserted, among other things, that the damages were excessive,
and he joined Pfizer‟s motion.
       The trial court found, “[a]fter weighing the evidence[,] . . . that the jury clearly
should have reached a different verdict as to [Pfizer‟s] liability” and “as to damages.”
Although the court concluded that there was sufficient evidence that Hsu had
misappropriated IREF‟s trade secrets, it found that “[t]here was insufficient evidence that
Pfizer knew, or had reason to know,” that Hsu had done so, and “insufficient evidence
that Pfizer acquired or used any trade secrets of IREF knowing, or having reason to
know, that the information was acquired through improper means.” (Italics added.) The
court explicitly “credit[ed] the testimony of the IDMC members and Pfizer employees”
that no IDMC member or Pfizer employee had ever asked Hsu to access IREF‟s
databases or had ever had any suspicion that information provided by Hsu „was based on
improper access to IREF databases.” The court found IREF expert Teichman‟s testimony
to be inadequate to support Pfizer‟s liability. In addition, the court found that Hsu was
not Pfizer‟s agent and that Pfizer had not conspired with Hsu. The court took the position
that “[t]he weight of the evidence established that Hsu acted without the knowledge and
consent of Pfizer.”

                                               20
       The trial court also found the damage award “clearly excessive.” “[T]he actual
loss to IREF from any misappropriation is the amount that it would have received if the
data access had been purchased rather than stolen. The evidence was insufficient to show
that the amount IREF would have received for granting database access in this case is
anywhere near” $38 million. “Considering all of the contracts entered into by IREF, the
proposals to Pfizer for the CABG-II study, and all of the other evidence in the case, it is
unreasonable to conclude that the loss to IREF from any misappropriation in this case
would exceed the range of $1 million to $3 million.”
                                        3. Analysis
       Our review of appellant IREF‟s challenge to the trial court‟s new trial order in this
appeal is hampered by IREF‟s failure to produce an appellate record that includes all of
the evidence that was before the jury. Videotaped deposition testimony of numerous
individuals was played for the jury at trial, but this testimony was not transcribed by the
court reporter in the record of the trial. The deposition transcripts were instead marked as
court exhibits. However, IREF failed to have these exhibits (or any others, for that
matter) transferred to this court. (Cal. Rules of Court, rule 8.224.) Consequently, the
testimony of the witnesses who testified by videotaped deposition is not part of the
appellate record produced by IREF.
       “It is well settled, of course, that a party challenging a judgment has the burden of
showing reversible error by an adequate record.” (Ballard v. Uribe (1986) 41 Cal.3d 564,
574.) “It is appellant‟s burden to demonstrate error by an adequate record [citation], and
without an adequate record we must assume facts in support of the trial court’s order.”
(Vermeulen v. Superior Court (1988) 204 Cal.App.3d 1192, 1198-1199, italics added.)
“ „A judgment or order of the lower court is presumed correct. All intendments and
presumptions are indulged to support it on matters as to which the record is silent, and
error must be affirmatively shown.‟ ” (Denham v. Superior Court (1970) 2 Cal.3d 557,
564.) Since the testimony of numerous witnesses is missing from our record, we must

                                             21
presume that this missing testimony supports the trial court‟s reasons for granting the
                     20
new trial motions.
       The trial court‟s theory regarding Pfizer‟s lack of liability was that there was
insufficient evidence that Pfizer knew or had reason to know that Hsu had
misappropriated IREF‟s information or that he had transmitted information to Pfizer
acquired by improper means. The court specified that it credited the testimony of the
IDMC members and Pfizer employees in this regard.
       The IDMC was composed of Dr. Faich, who was the chairman of the IDMC, Hsu,
Dr. Mark Newman, White, and, apparently, Berry. Of these men, only Newman testified
live at trial. The videotaped deposition testimony of Berry and White was played for the
jury. Hsu and Faich did not testify at trial live or otherwise. Newman testified that he
was not aware of any IREF database information being provided to the IDMC by Hsu.
Newman also testified that Hsu had never suggested that any information he provided to
the IDMC came from IREF databases. We must presume that White and Berry also
provided testimony that supported the trial court‟s finding that they lacked any reason to
believe that Hsu was providing IREF‟s trade secret information to the IDMC.
       Pfizer employee Hubbard testified at trial that he had never asked Hsu for any
IREF database information, that Hsu had never offered him any such information, and
that, to his knowledge, Hsu had never offered such information to anyone at Pfizer.
Although Hsu offered comments on Pfizer‟s study protocol, Pfizer did not accept any of


20
       The missing videotaped deposition testimony included that of: Phillip Needleman,
Pfizer‟s head of research and development; Dr. William White, a member of the IDMC;
Dr. Donald Berry, another member of the IDMC; Snabes, a Pfizer employee who worked
with Hubbard on CABG I and CABG II; Dr. Robert Anders, who took over for Hubbard
as the director of CABG II when Hubbard was promoted; Dr. Mark Fletcher, an IDMC
member who also testified at trial; Sarah Torri, a Pfizer employee who assisted the
IDMC; Kenneth Verburg, a high-level Pfizer employee; Rima Veidemanis, a Pfizer
employee who worked on CABG II with Hubbard and Snabes; Dr. Spickler, who ran
IREF before Mangano became CEO; Daniel Canafax; and Richard Nossek.

                                             22
Hsu‟s comments. Hsu made no references to IREF databases in his communications with
Hubbard, and Hubbard had no reason to believe that any of Hsu‟s comments were based
on IREF database information. The videotaped deposition testimony of Pfizer employees
Needleman, Snabes, Anders, Torri, Verburg, and Veidemanis was played for the jury at
trial, and we must presume that it, like Hubbard‟s testimony, supports the trial court‟s
finding. Teichman testified that his opinion was limited to whether the information “was
useful or could have been useful to Pfizer. I wasn‟t asked to express an opinion of
whether that information was provided to Pfizer.” Evidence that the information taken by
Hsu “could have been useful” to Pfizer did nothing to establish that Pfizer knowingly
received that information.
       As to the damages award, since substantial evidence supports the trial court‟s
finding that Pfizer did not know or have reason to know of Hsu‟s misconduct, there is
also substantial evidence that Hsu was not acting as Pfizer‟s agent. Since IREF presented
no evidence regarding damages that was based solely on Hsu‟s misappropriation of its
trade secrets, it naturally follows that the trial court‟s grant of a new trial to Hsu on
damages was supported by substantial evidence. No evidence at trial indicated that Hsu
would have paid IREF $38 million (or any amount) for its trade secrets or that Hsu
obtained $38 million in unjust enrichment as a result of his misappropriation of IREF‟s
trade secrets.
       In its opening brief, IREF purported to argue that the trial court‟s new trial order
was an abuse of discretion because the evidence could not support a verdict for Pfizer.
However, its actual arguments were based on the evidence it presented at trial, rather than
the conflicting evidence presented by Pfizer at trial. For instance, IREF argued with
regard to the agency/conspiracy issue that the court‟s finding was erroneous because
“there was ample evidence” and “substantial evidence” to support IREF’s claim. As
Pfizer pointed out in its respondent‟s brief, these arguments attempted to turn the
standard of review on its head. IREF‟s burden was to show the absence of substantial

                                              23
evidence to support Pfizer‟s defense. It is irrelevant whether substantial evidence could
support a contrary finding in IREF‟s favor.
         In its reply brief, IREF argues for the first time that the trial court was biased
against it, and therefore the order “should be vacated” or “[a]t the very least” should not
be subjected to the deferential standard of review ordinarily applied to new trial orders.
Appellate courts ordinarily do not consider new issues raised for the first time in an
appellant‟s reply brief because such a tactic deprives the respondent of the opportunity to
respond to the contention. (Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 764-765.)
It is only upon a showing of good cause for failing to raise the issues earlier that an
appellate court will address issues that are initially raised in the reply brief. (Ibid.)
         IREF argues, without any supporting documentation, that it “only learned of [the
trial judge‟s] bias and prejudice . . . in October 2010 (several months after IREF filed its
Opening Brief) . . . .” IREF claims that, more than a year after the judgment, and after
the trial judge retired from the bench, the retired judge joined a law firm that had
represented IREF in the early stages of this case. That law firm had withdrawn from its
representation of IREF after what IREF characterizes as a “contentious relationship.”
IREF claims that the judge had a bias against IREF when he ordered a new trial because
he subsequently became associated with its former law firm, which IREF assumes was
biased against it. The logic of this argument escapes us, as it premised on a theory that
bias may be created retroactively. IREF does not suggest that the judge and law firm
were somehow associated at the time of or before the judge‟s ruling on the new trial
order.
         In any case, IREF has failed to show good cause for us to consider this issue
notwithstanding its failure to raise it earlier. IREF filed its opening brief in July 2010.
Respondents did not file their respondent‟s brief until January 2011. If, as IREF claims,
it learned of this issue in October 2010, it could have sought leave to file a supplemental
opening brief. Instead, it waited until August 2011, 10 months after it allegedly learned

                                                24
of this issue, to raise it for the first time. Since IREF has failed to establish good cause,
we decline to consider this contention.
       IREF has failed to establish that the trial court‟s new trial order is unsupported by
the record.


                                  D. Exemplary Damages
       IREF‟s new trial motion sought a new trial solely on exemplary damages.
Because the trial court granted IREF‟s motion for a new trial on exemplary damages (an
order that is not challenged in this appeal), IREF‟s appellate challenge to the trial court‟s
failure to award exemplary damages is moot.


                                       IV. Disposition
       The trial court‟s new trial order is affirmed.



                                            _______________________________
                                            Mihara, J.



WE CONCUR:



_____________________________
Premo, Acting P. J.



_____________________________
Elia, J.




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