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Schwarzenberger v. Louisiana State University Health Sciences Center-New Orleans

Court of Appeals of Louisiana, Fourth Circuit

October 3, 2018

PAUL O. SCHWARZENBERGER, M.D. AND CLINICAL ONCOLOGY RESEARCH ASSOCIATES, L.L.C.
v.
LOUISIANA STATE UNIVERSITY HEALTH SCIENCES CENTER-NEW ORLEANS AND THE LSU BOARD OF SUPERVISORS

          APPLICATION FOR WRITS DIRECTED TO CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2009-07311, DIVISION "D" Honorable Nakisha Ervin-Knott, JUDGE

          Samantha P. Griffin J. Dalton Courson STONE PIGMAN WALTHER WITTMAN, L.L.C. COUNSEL FOR PLAINTIFFS/APPLICANTS

          Katherine B. Muslow Meredith Cunningham LOUISIANA STATE UNIVERSITY HEALTH SCIENCES CENTER COUNSEL FOR DEFENDANTS/RESPONDENTS

          Court composed of Chief Judge James F. McKay, III, Judge Rosemary Ledet, Judge Sandra Cabrina Jenkins

          SANDRA CABRINA JENKINS, JUDGE

         Relators, Paul O. Schwarzenberger, M.D. and Clinical Oncology Research Associates, LLC ("CORA"), seek review of the trial court's May 22, 2018 judgment granting a motion for partial new trial filed by respondents/plaintiffs in reconvention, Louisiana State University Health Sciences Center-New Orleans and the LSU Board of Supervisors (collectively, "LSU"). The May 22, 2018 judgment withdrew a November 16, 2017 interlocutory judgment wherein the trial court previously granted relators' motion for partial summary judgment dismissing LSU's claims against relators relating to the Amgen clinical trial. For the reasons that follow, we grant relators' writ, reverse the trial court's May 22, 2018 judgment granting the motion for partial new trial, and reinstate the November 16, 2017 judgment granting relators' motion for partial summary judgment.

         FACTS AND PROCEDURAL HISTORY

         In 2002, LSU entered into clinical research agreements with two pharmaceutical companies, Amgen and GlaxoSmithKline ("GSK"), to conduct clinical trials of potential new treatments for cancer patients. Through these separate contracts both pharmaceutical companies agreed to pay LSU for the costs incurred for hosting the trials, including the direct clinical expenses, overhead, and the salaries and benefits of the LSU employees. At that time in 2002, Dr. Schwarzenberger was employed by LSU as a professor in the oncology department, and he served as the principal investigator for the Amgen and GSK clinical trials.

         In 2004, Dr. Schwarzenberger relinquished his full-time, tenured position at LSU and took a part-time associate professor position. At that time, LSU and the pharmaceutical sponsors of the clinical trials sought to have the patients in the trials transferred out of the LSU system to another venue. In May 2004, Dr. Schwarzenberger formed CORA as an entity for him to continue the clinical trials. Subsequently, the pharmaceutical companies, LSU, and CORA entered into transfer and assignment agreements whereby CORA assumed all responsibilities for the clinical trials and residual funds from those trials would transfer to CORA. Dr. Schwarzenberger's employment at LSU ended in 2006.

         On July 15, 2009, Dr. Schwarzenberger and CORA filed a petition for writ of mandamus, declaratory relief and damages against LSU for breach of contract alleging that LSU failed to transfer the funds from the Amgen and GSK clinical trials. On February 16, 2011, LSU filed an answer and a reconventional demand alleging that Dr. Schwarzenberger willfully mismanaged the financial matters associated with the Amgen and GSK clinical trials in breach of his employment agreement with LSU.

         On October 18, 2016, the trial court granted summary judgment in favor of LSU dismissing all the claims asserted by Dr. Schwarzenberger and CORA with prejudice. On appeal, this Court affirmed. Schwarzenberger v. Louisiana State Univ. Health Sciences Center New Orleans, 2017-0024 (La.App. 4 Cir. 8/24/17), 226 So.3d 1200. Thereafter, only LSU's claims in reconvention remained.

         On September 29, 2017, relators filed a motion for partial summary judgment seeking dismissal of all claims related to the Amgen clinical trial. Following a hearing, the trial court granted the motion for partial summary judgment and dismissed LSU's claims relating to the Amgen clinical trial. LSU sought supervisory review of the trial court's November 16, 2017 judgment on the motion for partial summary judgment; this Court denied the writ, noting that "relator has adequate remedy on appeal." Schwarzenberger v. Louisiana State Univ. Health Sciences Center New Orleans, unpub., 2017-0969 (La.App. 4 Cir. 12/1/17).

         In January 2018, LSU's claims against relators relating to the GSK clinical trial proceeded to a bench trial. Following a three day trial, the trial court rendered judgment in favor of LSU and awarded damages. The trial court's March 1, 2018 judgment and reasons for judgment adjudicated all remaining claims in the suit. In its written reasons for judgment regarding the GSK trial, the trial court found that Dr. Schwarzenberger breached his contractual and fiduciary obligations to LSU through fraud and self-dealing by using CORA to enter a "side contract" with GSK and mismanaging the GSK study.

         On March 12, 2018, LSU filed a motion for partial new trial. LSU argued that based on the evidence at the GSK trial, the trial court should "reconsider its interlocutory order dismissing LSU's Amgen claims in light of the findings in its Reasons for Judgment [in the GSK trial]" ...


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