Skye Orthobiologics LLC et al. v. CTM Biomedical LLC et al.

DOLLAR AMOUNT: $62 million

CASE NAME: Skye Orthobiologics LLC et al. v. CTM Biomedical LLC et al.

TYPE OF CASE: Trade secrets theft, breach of contract, breach of fiduciary duty

COURT: U.S. Central District

JUDGE(S): Judge Maame Ewusi-Mensah Frimpong

PLAINTIFF LAWYERS: Rosen Saba LLP, Ryan D. Saba, James R. Rosen, Todd M. Lander, Laura K. St. Martin, Neda Farah, Allison Owens

DEFENSE LAWYERS: Arnold & Porter Kaye Scholer LLP, Pamela J. Yates; Evans Fears Schuttert McNulty & Mickus, Joshua D. Cools

Betrayal. That was the theme in the trial accusing a man of stealing the secret formula of an important surgery product from his former close friend and employer.

The employer's company, Skye Orthobiologics, makes a human placental biologic product used during surgery to assist in the healing of wounds and reduce scarring, according to the company's lead trial attorney, Ryan D. Saba. The formula for it is the company's "one and only primary trade seeker," he said.

It comes in liquid and membrane form and is shelf-stable. "It's very convenient and very effective," added partner James Rosen.

The main defendant had been the number two person in charge when he quit the company and took the formula to start a competing business in July 2018, according to the plaintiffs and the jury. After a seven-day trial and four hours of deliberation last fall, the jury awarded Skye and a related company $36.5 million in lost profits plus $25.6 million in punitive damages. Skye Orthobiologics LLC v. CTM Biomedical LLC, 2:20-cv-03444 (C.D. Cal., filed April 14, 2020).

Rosen said he believes one reason the punitives award was so high was because "our client and the defendant had known each other a long time and their wives had known each other longer."

JAMES R. ROSEN

In fact, the jury only awarded damages against the former friend, not his companies nor colleagues, who also were defendants.

"This had a real element of betrayal in the trial, which ... can be very riveting," Rosen said, adding, "What they did was truly reprehensible."

The attorneys proved the betrayal to the jury with a batch of mocking WhatsApp messages that the former friend sent to his new colleagues. They "laid out their trail of deceits and lies and efforts to try and destroy our client's company," Saba said.

"They would be celebratory every time they switched an account from our client's company to their company. They would intentionally target the same customers. They'd try to steal the same sales force," he said. "They essentially tried to target our client's company in all aspects from top to bottom."

Under cross-examination, Saba got the defendant to crack and give "some answers ... almost bragging about how much money he was making," Rosen said. "Everybody knew it was because he'd stolen the formula of his friends."

"Ryan had him so flustered that the defendant could not even make eye contact with the jury," he added.

TODD M. LANDER

Attorneys for the former friend did not respond to a request to discuss the verdict.

At press time, the judge was still considering the plaintiffs' motion for another $8 million in fees and costs.

-- Don DeBenedictis