Free Motion for Judgment as a Matter of Law - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 01-cv-00413-JLK-BNB M.D. MARK, INC., Plaintiff, vs. KERR-McGEE CORPORATION and ORYX ENERGY COMPANY, Defendants.

DEFENDANTS' RENEWED MOTION FOR JUDGMENT AS A MATTER OF LAW PURSUANT TO RULE 50(b) OR ALTERNATIVELY, MOTION FOR NEW TRIAL, FOR REMITTITUR, AND/OR TO ALTER AND AMEND THE JUDGMENT PURSUANT TO RULE 59 AND 59(e)

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TABLE OF CONTENTS INTRODUCTION ...........................................................................................................................1 BACKGROUND .............................................................................................................................1 A. Plaintiff's Claims Can Be Broken Into Three Categories........................................1 Category 1: The claims relating to 16,000 miles of Oryx seismic data acquired by Kerr-McGee through the Kerr-McGee/Oryx merger ......................1 Category 2: The claim relating to the 760 miles of Kerr-McGee seismic data licensed directly to Kerr-McGee prior to the merger .....................3 Category 3: The claims relating to the 3,100 miles of seismic data of unknown origin ...................................................................................................3 B. This Court Made a Number of Significant Legal Rulings, Which Formed the Basis for Several Instructions Given to the Jury................................................3 The Court's merger instructions .........................................................................4 Court's instructions on transfers to subsidiaries .................................................4 The Court's instruction on the limited application of the 1994 License Agreement between M.D. Mark and Kerr-McGee Corporation .........................5 C. The Jury's Verdict Was In Three Sections ..............................................................5 Section A of the Verdict: Breach of the Oryx/Sun license agreements governing the 16,000 miles of Oryx seismic data (category 1 above)................6 Section B of the Verdict: Breach of the license agreements concerning the 760 miles of seismic data licensed directly to Kerr-McGee (category 2 above)...............................................................................................6 Section C of the Verdict: Misappropriation of trade secrets claims relating to 16,000 miles of Oryx seismic data (category 1) and 3,100 miles of seismic data from an unknown source (category 3)..............................7 D. This Court's Final Judgment....................................................................................8

LEGAL STANDARDS ...................................................................................................................9 ARGUMENT.................................................................................................................................11

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I.

This Court Should Enter Judgment for Defendants on All of Plaintiff's Claims Relating to the 16,000 Miles of Oryx Seismic Data (Category 1) and the 760 Miles of Kerr-McGee Seismic Data (Category 2). ............................................................11 A. Section A of the Verdict Form: This Court Should Enter Judgment for Defendants on Plaintiff's Claims for Breach of the Oryx/Sun License Agreements Relating to the 16,000 Miles of Oryx Seismic Data..........................11 1. The jury's finding that Oryx breached the Oryx/Sun license agreements by "transferring" the license(s) to "Kerr-McGee Corp." can only be construed as a finding that the merger was the breach...........12 As a matter of law (and as this Court correctly ruled), Oryx could not have breached the license agreements simply by virtue of the merger. .......................................................................................................12

2.

B.

Section B of the Verdict Form: This Court Should Enter Judgment for Defendants on Plaintiff's Breach of Contract Claim Relating to the 760 Miles of Seismic Data Licensed Directly to Kerr-McGee.....................................13 1. There is no evidence to support the jury's finding that Kerr-McGee transferred the 760 miles of Kerr-McGee seismic data (category 2 above) to any subsidiary, including Kerr-McGee Oil & Gas. ...................14 As a matter of law, Kerr-McGee had no obligation under its contract to "return" any of the 760 miles of Kerr-McGee seismic data.............................................................................................................15 Similarly, there is no evidence that Kerr-McGee failed to guard trade secrets in connection with the 760 miles of Kerr-McGee seismic data................................................................................................16

2.

3.

C.

Section C1(b) of the Verdict Form: This Court Should Enter Judgment for Defendants on Plaintiff's Misappropriation of Trade Secrets Claim Relating to the 16,000 Miles of Oryx Seismic Data. .............................................16 1. 2. 3. Kerr-McGee did not in fact transfer any seismic data to a subsidiary of Oryx or Kerr-McGee after the merger. ................................17 In any event, the license agreements do not prohibit a transfer to a subsidiary. ..................................................................................................23 Nor can Defendants be held liable for the 11,000 miles of Oryx seismic data that was returned to Plaintiff. ................................................24

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II.

As for the Claim Concerning the 3,100 Miles of Seismic Data (Category 3 Above) This Court Should at Least Grant a New Trial. .................................................................25 A. The Jury's $25,266,381 Damage Award for Misappropriation of Trade Secrets Was the Result of Passion or Prejudice.....................................................25 1. In Section C, the jury was asked only whether Defendants misappropriated the 16,000 miles of Oryx seismic data (category 1 above) and the 3,100 miles of seismic data (category 3 above). ...............25 The jury's award of $25,266,381 in damages for misappropriation exceeds, on a per-mile basis, the highest figure claimed by Plaintiff as an appropriate "license" fee for small transfers.....................................26 No matter how interpreted, the jury's $25,266,381 verdict is shockingly excessive and is contrary to this Court's instructions. ............27

2.

3. B.

A New Trial on the Damages for the 3,100 Miles of Alleged "Bootleg Data" Is Also Required Because There Is No Way to Know What Amount of the $25 Million Lump Sum Damages Amount Was Attributable to That 3,100 Miles. ...........................................................................................................28

III.

Other Grounds Exist for New Trial. ..................................................................................30 A. B. C. D. E. F. The Jury's Verdict Runs Counter to the Great Weight of the Evidence................30 The Jury's Verdict Is Contrary to this Court's Clear Instructions. ........................33 Certain Jury Instructions Were Legally Erroneous................................................34 The Court's Evidentiary Rulings Require a New Trial .........................................35 The Jury's Damages Awards, Whether Considered Separately or Collectively, Were the Result of Passion and Prejudice........................................37 A New Trial Should Be Granted for Cumulative Error and in the Interests of Justice. ...............................................................................................................39

IV.

Alternatively, the Court Should Order a Remittitur...........................................................39 A. For the 3,100 Miles of So-Called "Bootleg" Seismic Data (Category 3), the Maximum That Could Reasonably Be Awarded Is $620,000. ........................39

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B.

The Maximum That Could Be Awarded for the 16,000 Miles of Oryx Seismic Data (Category 1) Is $640,000, and Given That Defendants Returned 11,000 Miles of the Oryx Seismic Data, the Maximum Award Should Be $200,000...............................................................................................40 The Maximum That Could Be Recovered for the 760 Miles of KerrMcGee Seismic Data (Category 2) Is $152,000. ...................................................41

C. V.

This Court Should Alter or Amend the Judgment to Award Only Those Damages Recoverable for the 3,100 Miles of Seismic Data (Category 3). .......................................41

CONCLUSION AND PRAYER ...................................................................................................42 CERTIFICATE OF CONFERENCE ­ D.C.COLO.LCivR 7.1 ....................................................44 CERTIFICATE OF SERVICE ......................................................................................................45

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Defendants Kerr-McGee Corporation ("Kerr-McGee") and Oryx Energy Company ("Oryx") (collectively "Defendants") 1 respectfully submit their Renewed Motion for Judgment as a Matter of Law Pursuant to Rule 50(b) of the Federal Rules of Civil Procedure. Alternatively, Defendants submit their Motion for New Trial, for Remittitur, and/or to Alter and Amend the Judgment Pursuant to Rule 59 and 59(e) of the Federal Rules of Civil Procedure. In support thereof, Defendants state as follows: INTRODUCTION Although the Court has entered judgment based on the jury's verdict, most of Plaintiff's claims fail as a matter of law. Indeed, the only claim that survives is Plaintiff's claim for misappropriation of trade secrets relating to 3,100 miles of seismic data. But even as to that claim, a new trial is required because, among other reasons, there are no plausible ­ or even possible ­ grounds for awarding $25 million in damages on that claim. Moreover, there is no reasonable way to determine what portion of the $25 million found by the jury relates to the 3,100 miles of seismic data that Kerr-McGee obtained from an unknown source. For that reason, and for all of the reasons explained below, Defendants respectfully submit that this Court should vacate its judgment, enter judgment as a matter of law on most of Plaintiff's claims, order a new trial as to any remaining claims, or at the very least, order a substantial remittitur of the damages. BACKGROUND A. Plaintiff's Claims Can Be Broken Into Three Categories. Category 1: The claims relating to 16,000 miles of Oryx seismic data acquired by Kerr-McGee through the Kerr-McGee/Oryx merger. Plaintiff M.D. Mark is the current
1

Oryx Energy Company ceased to exist on February 26, 1999, at which time it became KerrMcGee as a result of a statutory corporate merger. 1

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owner of certain seismic data (covering some 16,000 miles) that PGI (M.D. Mark's predecessor) licensed to Oryx Energy Company (Oryx) or its predecessor Sun Exploration and Production Company prior to the merger between Oryx and Kerr-McGee in 1999. Beginning in 1985, and continuing up until (and even after) the merger, the Oryx seismic data was held by Sun Operating Limited Partnership ("SOLP") ­ a limited partnership in which Oryx (and KerrMcGee, after the merger) was the managing general partner. DX-A25. Multiple licensing agreements (referred to as the "Oryx/Sun License Agreements") govern the extent to which the Oryx seismic data could be disclosed to third parties. In general, the Oryx/Sun License Agreements either: (1) are silent on the question of whether a merger between the licensee and some other company or a transfer by the licensee to a subsidiary effectuates an improper transfer of the license; or (2) expressly authorize copies of the seismic data to be given to the surviving company in a merger or to a subsidiary in certain circumstances. At trial, Plaintiff claimed that, when Oryx merged into Kerr-McGee, the merger itself effected an unauthorized transfer of the seismic data to Kerr-McGee in violation of the Oryx/Sun License Agreements. Plaintiff also claimed that either Oryx or Kerr-McGee improperly

transferred seismic data to a subsidiary in violation of the Oryx/Sun License Agreements. 2 Plaintiff sued Kerr-McGee for breach of contract and for misappropriation of trade secrets in connection with the Oryx seismic data acquired by Kerr-McGee through the merger.

Although Plaintiff originally claimed that Oryx breached the Oryx/Sun License Agreements back in 1985, when Oryx transferred all of its oil and gas interests (including its interests in the PGI seismic data) to the limited partnership SOLP, the Court stated (and M.D. Mark conceded) at the outset of trial that the 1985 transfer was abandoned as an independent cause of action. Tr:2-3. Further, M.D. Mark later stated on the record that it was not claiming any damages in connection with the 1985 transfer of the seismic data to SOLP. Tr:1260-61. 2

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Category 2:

The claim relating to the 760 miles of Kerr-McGee seismic data

licensed directly to Kerr-McGee prior to the merger. Plaintiff M.D. Mark is also the current owner of additional seismic data (covering 760 miles) that was licensed separately to KerrMcGee prior to the merger between Oryx and Kerr-McGee. This Kerr-McGee seismic data is now governed by an amended license agreement between Kerr-McGee and M.D. Mark dated May 13, 1994. PX-60. That agreement prohibits any assignment by the licensee and defines assignment to include "any transfer of assets or change in ownership of Licensee, whether by merger or otherwise," and also provides that in "the event of the Licensee's future corporate reorganization, or in the event of a third party acquisition or merger, the license granted herein shall immediately terminate." Plaintiff claims that Kerr-McGee breached the 1994 License Agreement as to the 760 miles of seismic data when Oryx was merged into Kerr-McGee. Category 3: The claims relating to the 3,100 miles of seismic data of unknown origin. Finally, during the discovery phase of this lawsuit, Kerr-McGee discovered that it also possessed (at its offsite storage facility) another 3,100 miles of seismic data belonging to Plaintiff. It is not known how Kerr-McGee came into possession of these 3,100 miles of seismic data. Plaintiff claimed that the 3,100 miles of seismic data was "bootleg" seismic data that KerrMcGee or one of its predecessors had obtained improperly. Plaintiff seeks to hold Kerr-McGee liable for these 3,100 miles of seismic data under a misappropriation of trade secrets theory. B. This Court Made a Number of Significant Legal Rulings, Which Formed the Basis for Several Instructions Given to the Jury.

This case was tried to a jury from September 17-26, 2007. At the close of Plaintiff's case, and again at the close of all the evidence Kerr-McGee moved for judgment as a matter of law under FED. R. CIV. P. 50(a). The parties also raised various legal issues in the context of

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formulating jury instructions. At the close of the evidence, this Court ruled as a matter of law and instructed the jury on three issues (1) whether a merger could constitute an improper conveyance of the licenses; (2) whether transfer of a seismic data license to a subsidiary constitutes an improper conveyance; and (3) whether the 1994 License Agreement between KerrMcGee and M.D. Mark applied in any respect to the 16,000 miles of Oryx seismic data. The Court's merger instructions. With respect to the effect of a merger, the Court instructed the jury as follows: "A merger is not a conveyance, transfer or assignment. It does not give rise to a claim that a contract with a party to the merger is no longer in effect on the ground of nonassignability, unless the contract specifically provides that it does not survive a merger." Jury Instruction 3.2.2(4). The Court further instructed the jury: A merger does not affect a pre-existing license of one of the parties to a merger unless the license agreement specifically provides that it does. In other words, if a license agreement is silent on the question of a merger, then the fact of a merger will not constitute a breach of that agreement. A merger between a licensee and another entity will breach the terms of the licensee's agreement with a licensor only if the license agreement so provides. Jury Instruction No. 3.2.3. The Court's instructions on transfers to subsidiaries. With respect to whether a transfer of seismic data to a licensee's subsidiary constitutes a breach of a license agreement, this Court ruled as a matter of law in Plaintiff's favor and instructed the jury as follows: A transfer by a licensee to a subsidiary of the licensee is prohibited by a license [agreement] unless such a transfer is specifically permitted by the license agreement. In other words, if a license agreement does not specifically provide that the licensee may transfer the license to a subsidiary of the licensee, then such a transfer constitutes a breach of that license agreement. Once a merger is achieved, the new or surviving business entity is bound by the terms of the license agreement transferred to it by virtue of the merger. Unless the agreement permits the new or surviving entity to transfer the license to a

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subsidiary after a merger, such a transfer is not allowed and constitutes a breach of the license agreement. Jury Instruction 3.2.3. Defendants objected to this instruction. Tr:1261-63. The Court's instruction on the limited application of the 1994 License Agreement between M.D. Mark and Kerr-McGee Corporation. Throughout trial, Plaintiff argued that the terms of the 1994 License Agreement between M.D. Mark and Kerr-McGee, which specifically addressed whether a transfer by merger was permitted, governed all of the seismic data in Kerr-McGee's possession, including not only the 760 miles of Kerr-McGee seismic data (category 2 above), but also the 16,000 miles of Oryx seismic data that Kerr-McGee acquired in 1999 upon its merger with Oryx (category 1 above). However, this Court ruled as a matter of law at the close of evidence that 1994 License Agreement between M.D. Mark and Kerr-McGee did not govern the Oryx seismic data Kerr-McGee received through its merger with Oryx (i.e., the 16,000 miles described in category 1 above). Thus, Jury Instruction 3.2.4 told the jury: During this trial, you received a copy of and heard testimony regarding a license agreement between Kerr-McGee and M.D. Mark dated May 13, 1994 (Ex. 60). The terms of this agreement apply only to seismic data that Kerr-McGee had licensed from M.D. Mark or M.D. Mark's predecessors on or before May 13, 1994. Oryx was not a party to this agreement, and the terms of this agreement do not modify or change the terms of the license agreements between M.D. Mark and Oryx (or any of Oryx's predecessors) into which those entities entered before the merger of Oryx and Kerr-McGee. In other words, the terms and conditions of the license agreements between Oryx and M.D. Mark (or their predecessors) that existed before the merger were not changed or modified by the May 13, 1994 agreement (Ex. 60) between KerrMcGee and M.D. Mark. C. The Jury's Verdict Was In Three Sections. The special verdict form was broken into three sections, labeled A, B, and C. Sections A and B dealt with breach of license agreements. Section A inquired about the 16,000 miles of

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Oryx seismic data (category 1 above), and Section B inquired about the 760 miles of KerrMcGee seismic data (category 2 above). The third section, Section C, addressed Plaintiff's claims for misappropriation of trade secrets. The Verdict Form is attached as Exhibit A. Section A of the Verdict: Breach of the Oryx/Sun license agreements governing the 16,000 miles of Oryx seismic data (category 1 above). The jury found, in Question A1(a), that Plaintiff M.D. Mark, Inc. proved by a preponderance of the evidence that its predecessor PGI did substantially all of the things that the Oryx/Sun license agreements required PGI to do. See Verdict Form, p. 1. The jury then found, in Question A1(b), that M.D. Mark proved by a preponderance of the evidence that Oryx failed to do something that one or more of the Oryx/Sun license agreements required Oryx to do or did something that one or more of those license agreements prohibited Oryx from doing. Id. at 2. Next, the jury was asked in Question A1(c), "What is it that M.D. Mark proved Oryx (Sun) did or failed to do that constituted a breach of licensing agreement?" The jury answered: Oryx (Sun) transferred the license agreement to Kerr McGee Corp., without prior approval. Id. (emphasis added). Finally, the jury found, in answer to Question A.2(a) and (b), that Oryx's breach of the Oryx/Sun license agreements caused M.D. Mark to suffer actual damages of $15,745,000. Id. at. 2-3. 3 Section B of the Verdict: Breach of the license agreements concerning the 760 miles of seismic data licensed directly to Kerr-McGee (category 2 above). In answer to Question

Although, at the outset of trial, Plaintiff claimed damages for some 16,100 miles of Oryx seismic data, during trial Plaintiff acknowledged that some of that data no longer belonged to M.D. Mark and thus that Plaintiff was only seeking damages for 15,745 miles of Oryx seismic data. Ex. 206; Tr:788. Thus, the jury's damage award translates to $1,000 per mile. 6

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B1(a), the jury found that Kerr-McGee Corporation entered into one or more valid license agreements with M.D. Mark and/or its predecessor, PGI. In answer to Question B1(b), the jury found that PGI and M.D. Mark did substantially all of the things that those license agreements required PGI and M.D. Mark to do. And in Question B1(c), the jury found that Kerr-McGee Corporation failed to do something that one or more of the license agreements required KerrMcGee Corporation to do, or did something that one or more of the license agreements prohibited Kerr-McGee Corporation from doing. Then, when asked in Question B1(d) what Kerr-McGee did or failed to do that constituted a breach of licensing agreement with respect to the 760 miles of seismic data, the jury explained the basis for its breach finding as follows: Transfer license to Kerr McGee Oil & Gas, no prior consent. All data was not returned trade secrets were not safe guarded. Verdict Form, p. 4. The jury found that Plaintiff sustained $968,750.00 in damages as a result of Kerr-McGee's breach of the licensing agreements covering the 760 miles of data. Id., pp. 4-5. Section C of the Verdict: Misappropriation of trade secrets claims relating to 16,000 miles of Oryx seismic data (category 1) and 3,100 miles of seismic data from an unknown source (category 3). The Court's verdict form submitted two misappropriation of trade secrets claims, followed by a lump sum damages issue. Claim relating to 3,100 miles of data (category 3 above) from an unknown source. Question C1(a) asked whether Kerr-McGee Corporation gained access to and possessed PGI Data through improper means. The instructions accompanying the verdict (Instruction 3.3.2) makes clear that this subpart C1(a) was asking about the 3,100 miles of PGI Data that were from an unknown source (category 3). The jury answered "Yes" to Question C1(a). The jury was then asked in Question C1(a)(i) "When did Kerr-McGee improperly gain access to and possess

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the PGI Data?" Again, the instruction accompanying this question (Instruction 3.7) makes clear that the jury is being asked only about the 3,100 miles of seismic data in Kerr-McGee's possession from an unknown source. The jury answered Question C1(a)(i), finding that "Kerr McGee had possession of the data in 1996 when it was shipped to Midcon data from Kerr McGee offices in Houston." Verdict Form, p.5. Claim relating to 16,000 miles of data (category 1 above) acquired by Kerr-McGee through the merger. The second misappropriation of trade secrets claim concerned the 16,000 miles of Oryx data (category 1 above) that Kerr-McGee acquired from Oryx during the merger. The jury was asked in Question C1(b) whether Kerr-McGee, after the merger with Oryx, wrongfully transferred control of the PGI Data from Oryx, or any wholly owned subsidiary of Oryx, to a subsidiary of Kerr-McGee Corporation. Verdict Form, p. 5. The jury answered "yes." Lump sum damages. Finally, the jury was asked, over Defendant's objection, a lump sum damages question (Question C2) for both misappropriation of trade secrets claims. Verdict Form, p. 6. The jury found total damages of $25,266,381 for Kerr-McGee's alleged

misappropriation of (a) the 3,100 miles of seismic data from and unknown source (category 3); and (b) the 16,000 miles of Oryx seismic data acquired through the merger (category 1) D. The Court's Final Judgment On September 28, 2007, the Court entered judgment for Plaintiff based on the jury's findings in Section C (misappropriation of trade secrets) and awarded Plaintiff $25,266,381. (The Court's judgment is attached as Exhibit B.) Defendants renew their motion for judgment as a matter of law pursuant to FED. R. CIV. P. 50(b) and alternatively move for a new trial, remittitur, and/or to alter and amend the judgment pursuant to FED. R. CIV. P. 59(a) and/or 59(e).

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LEGAL STANDARDS Standard for JMOL. The standard for granting a Rule 50 motion for judgment as a matter of law is "essentially identical to the `genuine issue' requirement in the summary judgment context." Advantor Capital Corp. v. Yeary, 136 F.3d 1259, 1263 (10th Cir. 1998). Judgment as a matter of law "is warranted only if the evidence points but one way," Mason v. Okla. Turnpike Auth., 115 F.3d 1442, 1450 (10th Cir. 1997), and "[t]he evidence and inferences therefrom must be construed most favorably to the nonmoving party." Wolfgang v. Mid-Am. Motorsports, Inc., 111 F.3d 1515, 1522 (10th Cir. 1997). Although the court does not "weigh the evidence, pass on the credibility of the witnesses, or substitute [its] conclusions for that of the jury, the court must enter judgment as a matter of law in favor of the moving party if `there is no legally sufficient evidentiary basis . . . with respect to a claim or defense under the controlling law.'" Okla. Turnpike Auth., 115 F.3d at 1450 (citation omitted). Standards for new trial generally. This Court has discretion to grant a new trial "based on its appraisal of the fairness of the trial and the reliability of the jury's verdict." Gray v. Bicknell, 86 F.3d 1472, 1480 (8th Cir. 1996). "[T]he granting of a new trial involves an element of discretion which goes further than the mere sufficiency of evidence. It embraces all the reasons which inhere in the integrity of the jury system itself." Tidewater Oil Co. v. Waller, 302 F.2d 638, 643 (10th Cir. 1962). Moreover, this Court "has broad discretion in deciding whether to grant a new trial." Capstick v. Allstate Ins. Co., 998 F.2d 810, 819 (10th Cir. 1993). A new trial is warranted if: (a) the verdict cuts against the great weight of the evidence; (b) the damages were excessive; (c) there were erroneous evidentiary rulings that substantially prejudiced a party; (d) the jury was erroneously charged; or (e) if for any other reason the trial was not fair to the

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moving party. See generally 11 WRIGHT & MILLER, FEDERAL PRACTICE & PROCEDURE § 2805, at 54-56 (2d ed. 1995). A motion for new trial made on the ground that the verdict of the jury is against the great weight of the evidence normally presents a question of fact and not of law and is addressed to the discretion of the trial court. Harris v. Quinones, 507 F.2d 533, 535 (10th Cir. 1974); see also Black v. Hieb's Enter., Inc., 805 F.2d 360, 363 (10th Cir. 1986). "The judge can weigh evidence and assess the credibility of witnesses, and need not view the evidence from the perspective most favorable to the prevailing party." Landes Constr. Co. v. Royal Bank of Can., 833 F.2d 1365, 1371 (9th Cir. 1987)); see Smith v. Transworld Drilling Co., 773 F.2d 610, 613 (5th Cir. 1985). Standards for new trial/remittitur based on excessiveness of damages. If the jury's damages award is "so excessive as to shock the judicial conscience and to raise an irresistible inference that passion, prejudice, corruption or other improper cause invaded the trial," the court must order a new trial. Malandris v. Merrill Lynch, Pierce, Fenner & Smith, 703 F.2d 1152, 1168 (10th Cir. 1981) (en banc) (plurality op.); see also Mason v. Texaco, Inc., 948 F.2d 1546, 1560-61 (10th Cir. 1991); accord Dunn v. HOVIC, 1 F.3d 1362, 1383 (3d Cir. 1993). On the other hand, if the court finds the damages award to be excessive, but not the result of passion, prejudice, or other improper cause, the court may order a remittitur instead of a new trial. Mason, 948 F.2d at 1560-61; Malandris, 703 F.2d at 1168. Thus, damage awards that are merely excessive or so large as to appear contrary to reason, are normally subject to remittitur, rather than a new trial. Brunnemann v. Terra Int'l, Inc., 975 F.2d 175, 178 (5th Cir. 1992). As with the motion for new trial, the decision whether to grant a remittitur rests within the broad discretion of the trial court. Garrick v. City and County of Denver, 652 F.2d 969, 971 (10th Cir. 1981).

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Standard for motion to alter or amend the judgment. Grounds warranting a motion to reconsider or a motion to alter or amend the judgment under Rule 59(e) include "(1) an intervening change in the controlling law, (2) new evidence previously unavailable, and (3) the need to correct clear error or prevent manifest injustice." Servants of the Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000). Such a motion may be granted "where the court has

misapprehended the facts, a party's position, or the controlling law." Id. ARGUMENT I. THIS COURT SHOULD ENTER JUDGMENT FOR DEFENDANTS ON ALL OF PLAINTIFF'S CLAIMS RELATING TO THE 16,000 MILES OF ORYX SEISMIC DATA (CATEGORY 1) AND THE 760 MILES OF KERR-MCGEE SEISMIC DATA (CATEGORY 2). A. Section A of the Verdict Form: This Court Should Enter Judgment for Defendants on Plaintiff's Claims for Breach of the Oryx/Sun License Agreements Relating to the 16,000 Miles of Oryx Seismic Data.

With respect to breach of contract issue concerning the 16,000 miles of Oryx seismic data (category 1 above, and submitted in Section A), the Court's Verdict Form required the jury to specify the precise basis for its breach of contract finding. Thus, the jury was first asked, in Question A1(b), whether "M.D. Mark prove[d] by a preponderance of the evidence that Oryx (formerly Sun Exploration and Production Company) fail[ed] to do something that one or more of the Seismic Data License Agreements required [Oryx/Sun] to do or did something that one or more of the Seismic Data License Agreements prohibited [Oryx/Sun] from doing." Verdict Form, Question A1(b). After the jury answered "yes" to Question A1(b), the jury was then asked in Question A1(c) to specify the basis for its breach finding in Question A1(b). Thus, Question A1(c) asked: "What was it that M.D. Mark proved (Oryx) Sun did or failed to do that

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constituted a breach of licensing agreement?" The jury responded: "Oryx (Sun) transferred the license agreement to Kerr McGee Corp, without prior approval." (emphasis added) 1. The jury's finding that Oryx breached the Oryx/Sun license agreements by "transferring" the license(s) to "Kerr-McGee Corp." can only be construed as a finding that the merger was the breach.

The jury's answer to Question A1(c) makes clear that the only basis for the jury's breach of contract finding in Section A is the fact that Oryx (Sun) merged into Kerr-McGee Corp. The record contains no evidence that, prior to the merger, Oryx (Sun) ever transferred the license agreements governing the 16,000 miles of Oryx seismic data to Kerr-McGee Corp. Rather, it is undisputed that Kerr-McGee Corp. acquired its interest (albeit an indirect interest) in the 16,000 miles of Oryx seismic data only by virtue of the merger. Ex. A-25, Ex. 186; Tr:192-193. Thus, construed in light of the evidence, the jury's fact finding that Oryx (Sun) breached the license agreements with respect to the 16,000 in seismic data by transferring the license agreement to "Kerr McGee Corp." is tantamount to a finding that Kerr-McGee/Oryx merger was the breach. 2. As a matter of law (and as this Court correctly ruled), Oryx could not have breached the license agreements simply by virtue of the merger.

Where the jury returns a special verdict, the court is obligated to apply appropriate legal principles to the facts found by the jury. Brown v. Presbyterian Healthcare Servs., 101 F.3d 1324, 1332 (10th Cir. 1996). Thus, "it is for the court to decide upon the jury's answers . . . what the resulting legal obligation is." Thedorf v. Lipsey, 237 F.2d 190, 193 (7th Cir. 1956). Here, the Court already ruled on the "appropriate legal principles." The Court correctly ruled, as a matter of law, that "[a] merger is not a conveyance, transfer or assignment. It does not give rise to a claim that a contract with a party to the merger is no longer in effect on the

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ground of nonassignability, unless the contract specifically provides that it does not survive a merger." Jury Instruction 3.2.2(4). Moreover, this Court also correctly ruled that "[a] merger does not affect a pre-existing license of one of the parties to a merger unless the license agreement specifically provides that it does" and that "if a license agreement is silent on the question of a merger, then the fact of a merger will not constitute a breach of that agreement." Jury Instruction No. 3.2.3. See also TXO Prod. Co. v. M.D. Mark, Inc., 999 S.W.2d 137, 142-43 (Tex. App.--Houston [14th Dist.] 1999, pet. denied) (no transfer of seismic data occurred during corporate merger); M.D. Mark, Inc. v. Nuevo Energy Co., 988 S.W.2d 463, 465 (Tex. App.--Houston [1st Dist. 1999, no pet.) (same). None of the Oryx/Sun licensing agreements expressly provides that a merger between Oryx and another company would breach the license agreements. The jury's finding that Oryx "breached" the license agreement by "transferring" the 16,000 miles of seismic data (category 1 above) through its merger with Kerr-McGee means that the jury's breach finding in Section A is legally invalid as a matter of law. Accordingly, judgment must be entered in Defendants' favor on this breach of contract claim. 4 B. Section B of the Verdict Form: This Court Should Enter Judgment for Defendants on Plaintiff's Breach of Contract Claim Relating to the 760 Miles of Seismic Data Licensed Directly to Kerr-McGee.

As to the Section B of the Verdict Form, which submits Plaintiff's breach of contract claim concerning the 760 miles of seismic data (category 2 above) licensed directly to Kerr-

Further, it does not matter whether the breach finding was based on the entire 16,000 miles of data or only the 5,000 miles of data that allegedly was not returned to Plaintiff. Because KerrMcGee had no obligation to return any of Oryx seismic data acquired as a result of the merger, Kerr-McGee cannot be held liable for not returning some portion of that data. Nor could KerrMcGee possibly be liable for the some 11,000 miles of Oryx seismic data that was returned. 13

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McGee prior to the merger, the jury was again asked to specify the precise basis for its finding of a breach. Thus, the jury was first asked whether M.D. Mark proved that Kerr-McGee Corp. failed to do something that one or more of the Kerr-McGee license agreements required KerrMcGee Corp. to do, or did something that one or more of those license agreements prohibited Kerr-McGee Corp. from doing. If the jury answered "yes," then the jury was asked to specify what it was that M.D. Mark proved Kerr-McGee Corporation did or failed to do that constituted a breach of licensing agreement. Verdict Form p. 4. The jury answered "yes" to the first question (Question B1(c)), and then specified the basis for its "yes" answer to be that KerrMcGee "transfer[red] license to Kerr McGee Oil & Gas, no prior consent. All data was not returned trade secrets were not safeguarded." Verdict Form, p. 4 (emphasis added). 1. There is no evidence to support the jury's finding that Kerr-McGee transferred the 760 miles of Kerr-McGee seismic data (category 2 above) to any subsidiary, including Kerr-McGee Oil & Gas.

The jury's finding that Kerr-McGee breached the license agreement with M.D. Mark or PGI by "transfer[ring] the license to Kerr McGee Oil & Gas" is not supported by legally sufficient evidence. Plaintiff relied heavily on the February 11, 1999 letter from Patricia Horsfall (who was then Oryx's vice president of operations) instructing M.D. Mark to change its records to reflect that, after the merger, the licensee for the 16,000 miles of Oryx seismic data would be Kerr-McGee Oil & Gas Corporation. PX-132. But that letter related only to the 16,000 miles of Oryx seismic data (category 1 above) acquired by Kerr-McGee through the merger. There is no evidence that Kerr-McGee ever suggested that it was transferring, much less that Kerr-McGee did actually transfer, any of the 760 miles of the seismic data (category 2 above) licensed directly to Kerr-McGee to any subsidiary (whether to Kerr-McGee Oil & Gas Corporation or any other

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subsidiary). To the contrary, the evidence is uncontroverted that Kerr-McGee had discontinued its domestic onshore operations and had placed the seismic data in sealed storage at Mid-Con in 1996, where it remained until it was transferred to the custody of Kerr-McGee's legal department for safe-keeping as evidence in this lawsuit. Tr:427-28, 470-72, 742, 749, 755-56, 933, 959-60. The jury's finding in Question B1(d) that Kerr-McGee "breached" by transferring the 760 miles of Kerr-McGee licensed data to "Kerr-McGee Oil and Gas" cannot be sustained on the evidence. 2. As a matter of law, Kerr-McGee had no obligation under its contract to "return" any of the 760 miles of Kerr-McGee seismic data.

With respect to the jury's finding that Kerr-McGee failed to return all of the 760 miles of seismic data, any such failure could only constitute a breach of Kerr-McGee license agreements with M.D. Mark or PGI if, under those agreements, Kerr-McGee had the obligation to return the seismic data. But the 1994 Agreement between Kerr-McGee and M.D. Mark (which governs the 760 miles of Kerr-McGee seismic data) only provides that the license terminates if Kerr-McGee transfers assets, undergoes a change in ownership, or is acquired by a third party. It says: Licensee may not assign this Agreement, in whole or part, without the prior written consent of MDM. "Assignment" shall include any transfer of assets or change in ownership of Licensee, whether by merger or otherwise. In the event of Licensee's future corporate reorganization, or in the event of a third party acquisition or merger, the license granted herein shall immediately terminate and all copies of the Data shall be promptly returned to Licensor. Any purported assignment of this Agreement or any rights of Licensee without the prior written consent of MDM shall terminate this Agreement and the rights contained herein forthwith. PX-60, ¶ V. Nothing in the unambiguous language of the 1994 Agreement prohibits KerrMcGee from acquiring assets of another company or from acquiring another company through a merger. It only prohibits Kerr-McGee from transferring or selling its assets, including by

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merger, or from changing the "ownership" of the licensee, i.e., Kerr-McGee. As to the 760 miles of seismic data (category 2 above), there was no change in ownership of the licensee because Kerr-McGee Corp. is the licensee, and ownership of Kerr-McGee Corp. did not change. KerrMcGee Corp. was not acquired; rather, Kerr-McGee Corp. acquired Oryx/Sun. Thus, as a matter of law there was no prohibited assignment of the 760 miles of seismic data, because that data had been licensed to and held by Kerr-McGee Corp. prior to the merger and continued to be licensed to and held by Kerr-McGee after the merger. 3. Similarly, there is no evidence that Kerr-McGee failed to guard trade secrets in connection with the 760 miles of Kerr-McGee seismic data.

Finally, the jury found, in answer to Question B1(d), that Kerr-McGee breached the license agreements when "trade secrets were not safe guarded." However, there is no evidence that Kerr-McGee failed to safeguard the 760 miles of seismic data that was directly licensed to Kerr-McGee. To the extent Kerr-McGee shipped any of that data off-site, it was under seal and sent solely for purposes of storage. There certainly is no legally sufficient evidence that KerrMcGee showed any of the seismic data to a third party, as prohibited by the 1994 Agreement. Judgment should be rendered for Defendants on Plaintiff's breach of license agreement claim relating to the 760 miles of seismic data (category 2 above). C. Section C1(b) of the Verdict Form: This Court Should Enter Judgment for Defendants on Plaintiff's Misappropriation of Trade Secrets Claim Relating to the 16,000 Miles of Oryx Seismic Data.

As for the misappropriation of trade secrets claim relating to the 16,000 miles of Oryx seismic data (category 1 above) acquired by Kerr-McGee by virtue of the merger, the jury was asked, in Question C1(b), whether "Kerr-McGee Corporation, after the merger with Oryx, wrongfully transferred control of the PGI Data from Oryx, or any wholly owned subsidiary of

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Oryx, to a subsidiary of Kerr-McGee Corporation." Verdict Form, p. 5. The jury answered "Yes." There is no legally sufficient evidentiary basis for this finding. 1. Kerr-McGee did not in fact transfer any seismic data to a subsidiary of Oryx or Kerr-McGee after the merger.

Prior to the merger, the 16,000 miles of seismic data was held by SOLP (an Oryx subsidiary); Oryx was the managing partner of SOLP. The undisputed evidence establishes that, prior to the February 1999 merger between Kerr-McGee and Oryx, the 16,000 miles of Oryx seismic data was held by an Oryx subsidiary, called Sun Operating Limited Partnership ("SOLP"), and that Oryx was the managing general partner and principal owner of SOLP. DX A-25, ¶¶ 9-11; Tr:192-93, 1054-56. Thus, as shown below, prior to the merger, the 16,000 miles of seismic data was held in a partnership (SOLP) of which Oryx was managing partner.

Before Merger
Managing Partner of the Limited Partnership

ORYX

SOLP
16,000 Miles

The Limited Partnership

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Immediately after the merger, Kerr-McGee succeeded to Oryx's partnership interest in SOLP, but SOLP continued to hold the 16,000 miles of seismic data. On February 29, 1999, Oryx Energy Company ("Oryx") "merged into Kerr-McGee Corporation, . . . with Kerr-McGee Corporation as the surviving corporation." DX A-25, ¶12. This made "Kerr-McGee Corporation the managing general partner and principal indirect owner of Sun Operating Limited Partnership." Id.; Tr:1054-56. Thus, immediately after the merger, the 16,000 miles of seismic data continued to be held by SOLP (Tr:1056-57, 1058, 1076), but Kerr-McGee (not Oryx) was now the managing general partner of SOLP:

Immediately After Merger
Managing Partner of the Limited Partnership

KERRMCGEE

SOLP
16,000 Miles

The Limited Partnership

On July 31, 1999 the name of SOLP was changed, and Kerr-McGee transferred its partnership interest in SOLP, but the 16,000 miles of seismic data continued to be held by the same limited partnership entity that used to be named SOLP. After the merger, there were two

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other formalistic changes relating to the entity (SOLP) holding the 16,000 miles of seismic data. First, on July 31, 1999, the name of SOLP was changed to Kerr-McGee Oil & Gas Onshore LP (KMOGO LP). DX A-25, ¶12; Tr:1056-57, 1076. However, the data remained with the same entity, the limited partnership formerly named SOLP, but now known as KMOGO LP. Tr:1057, 1058, 1076, 1077-78. As shown in the graphic below, this was just a name change for the same entity; it was not a transfer of any 16,000 miles of seismic data to a different entity.

July 31, 1999
Managing Partner of the Limited Partnership

KERRMCGEE

Partnership Name Change

KMOGO LP
16,000 Miles

The Limited Partnership

The second formalistic change was that Kerr-McGee Corporation (which then held the managing partnership interest in SOLP, now known as KMOGO LP) transferred its partnership interest in the limited partnership (with that limited partnership continuing to hold the 16,000 miles of seismic data) to another Kerr-McGee subsidiary, Kerr-McGee Oil & Gas Onshore LLC ("KMOGO LLC"). DX A-25, ¶12; DX 186; Tr:1056-57, 1061, 1076, 1078. Thus, as is shown

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graphically below, the seismic data remained in the limited partnership (previously named SOLP, but now, by name change only, renamed KMOGO LP). The only thing that was

"transferred" by Kerr-McGee was its partnership interest in the limited partnership (that partnership interest was transferred from Kerr-McGee to KMOGO LLC).

July 31, 1999
Managing Partner of the Limited Partnership

KERRMCGEE

Transfer of Limited Partnership Interest

KMOGO LLC

KMOGO LP
16,000 Miles

The Limited Partnership

None of the foregoing is sufficient to support the jury's finding in Question C1(b) that "Kerr-McGee Corporation, after the merger with Oryx, wrongfully transferred control of the PGI Data from Oryx, or any wholly owned subsidiary of Oryx, to a subsidiary of Kerr-McGee Corporation." Verdict Form, p. 5. Certainly the merger, in and of itself, cannot prove wrongful transfer, absent something in one of the Oryx/Sun license agreements that prohibits such a transfer by merger. See Jury Instruction 3.2.2. As already explained, the Oryx/Sun license agreements did not equate mergers with improper assignments. See supra pp. 2, 13.

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Only two events occurred after merger. First, there was a name change by which the name of SOLP was changed to KMOGO LP. Second, Kerr-McGee transferred Kerr-McGee's partnership interest in SOLP (now known as KMOGO LP) to KMOGO LLC. (Kerr-McGee was initially the managing general partner of SOLP, but then transferred its partnership interest in SOLP (now known as KMOGO LP) to a Kerr-McGee subsidiary, KMOGO LLC.) It goes without saying that a corporate "name change" does not effect an improper assignment or transfer. See White v. Hitachi, Ltd., 2007 WL 2725888, at *5 (E.D. Tenn. Sept. 17, 2007) ("a name change does not affect an assignment or present a basis for invalidating the license"); Dirkes, M.D. v. Cont'l Cas. Co., 2006 WL 2381444 (S.D. Ohio Aug. 16, 2006) ("name change" was not an unlawful assignment of fiduciary duties); Cont'l Cas. Co. v. Dr Pepper Bottling Co. of Texas, 416 F. Supp.2d 497, 510 (N.D. Tex. 2006) ("A mere name change has no effect on a corporation's identity or its property rights or liabilities.") Similarly, that Kerr-McGee transferred ownership of its partnership interest in SOLP/KMOGO LP after the merger, is not a basis for finding a "wrongful transfer" of the 16,000 miles of seismic data. This is true because that 16,000 miles of seismic data remained at all times with the limited partnership SOLP (now renamed KMOGO LP). The court rejected a similar contention in Baxter Pharm. Prods. v. ESI Lederle, Inc., 1999 WL 160148 (Del. Ch. 1999). There, the defendant Lederle sought to terminate an agreement between it and Ohmeda Pharmaceuticals when Baxter Healthcare (BHC) acquired all of Ohmeda's outstanding stock. Lederle argued that the stock transfer (i.e., the change in ownership of Ohmeda) constituted a prohibited assignment of the agreement. Surveying the law, the court found that "[w]here an

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acquiror purchases the stock of a corporation, that purchase does not, in and of itself, constitute an `assignment' to the acquiror of any contractual rights or obligations." Id. at *5. Similarly, that the general partner of SOLP (now named KMOGO LP) changed after the merger is not a basis for finding a wrongful transfer of the seismic data that remained in the limited partnership. See White, 2007 WL 2725888 at *5 (recognizing that change in ownership of entity holding license, such as by stock sale, did not constitute prohibited or wrongful assignment of license, even where name of entity holding stock was changed after stock sale). Accordingly, given the undisputed evidence of what actually happened with the 16,000 miles of seismic data, this Court should disregard the jury's finding in Question C1(b) that Kerr-McGee wrongfully transferred control of that data to a Kerr-McGee subsidiary. Nor can the pre-merger letter from Oryx's Horsfall (PX-132) constitute evidence that the 16,000 miles of data (category 1 above) was wrongfully transferred to a Kerr-McGee subsidiary. Plaintiff argues that there was a wrongful transfer of the 16,000 miles Oryx seismic data because of a February 11, 1999 letter from Patricia Horsfall (then Oryx's vice president of operations) instructing M.D. Mark to change its records to reflect that, after the merger, the licensee for the 16,000 miles of Oryx seismic data would be Kerr-McGee Oil & Gas Corporation (PX-132). However, the record indicates that, contrary to the February 11th letter ­ written prior to the merger ­ there was, in fact, no transfer of the licenses for the 16,000 miles of Oryx data to Kerr-McGee Oil & Gas Corporation. Nor is there any evidence that the 16,000 miles of seismic data itself was transferred to Kerr-McGee Oil & Gas Corporation. Thus, Ms. Horsfall's premerger letter stating what she anticipated would occur does not reflect what subsequently did

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occur, and thus, cannot constitute legally sufficient evidence to support the jury's finding of a wrongful transfer of the 16,000 miles of Oryx seismic data to a Kerr-McGee subsidiary. 2. In any event, the license agreements do not prohibit a transfer to a subsidiary.

As already explained, the Sun/Oryx license agreements governing the 16,000 miles of seismic data either (1) are silent on the question whether the data may be used or transferred by a subsidiary, or (2) expressly permit a subsidiary to use the data in certain circumstances. See Ex. 3, at ¶ 4; Tr:200. The testimony at trial, including that from M.D. Mark's own witness, Patricia Cherne, established that it is the industry practice and custom for corporations to share license data with their subsidiaries, even when the license agreements do not specifically authorize such sharing. Tr:522, 534. Thus, it was error for the Court to instruct the jury that the transfer to a subsidiary is not allowed unless expressly authorized. 5 The case law, too, suggests that there is nothing improper about sharing trade secrets, including those that are subject to license agreements, with subsidiaries. See SI Handling Sys, Inc. v. Heisley, 658 F. Supp. 362, 370 (E.D.Pa. 1986) (parent and wholly-owned subsidiary are "essentially one and the same entity" for purposes of ownership and transfer of trade secrets). Indeed, the same logic that compels the conclusion that a parent cannot conspire with its wholly owned subsidiary, see Copperweld Cor. v. Independence Tube Corp., 467 U.S. 752, 771 (1984) (antitrust); Pizza Mgmt, Inc. v. Pizza Hut, Inc., 737 F. Supp. 1154, 1166 (D. Kan. 1990) (civil

5

Even if Defendants did not conclusively prove that transfers to a subsidiary are authorized when the agreement is silent, there was at least a fact issue as to whether transfers to a subsidiary constitute a breach of license agreement when the license agreement is silent. Therefore, this Court's instruction was erroneous and at least warrants a new trial. See infra Part III.C. 23

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conspiracy tort), compels the conclusion that a parent does not "wrongfully transfer" trade secrets by sharing them with a wholly-owned subsidiary. Cincom Sys., Inc. v. Novelis Corp., 2007 WL 128999 (S.D. Ohio 2007), does not require a different conclusion. In Cincom, the court held that a license to patent rights (which are subject a federal policy that disfavors assignability of such rights) cannot be transferred to a subsidiary, even through a merger. The court there distinguished the Texas courts' decisions in TXO and Nuevo on the basis that seismic data is not intellectual property. Id. at *6. Here, of course, no intellectual property rights are involved. Moreover, the decision in Cincom is contrary to this Court's ruling that a merger does not result in a prohibited transfer or assignment of a license to seismic data. Thus, because any transfer of seismic data to a subsidiary (and here, there was none) would not constitute a "wrongful" transfer of data, the jury's finding in Question C1(b) could not stand in any event. Judgment must be rendered for Defendants on this claim. 3. Nor can Defendants be held liable for the 11,000 miles of Oryx seismic data that was returned to Plaintiff.

Finally, it should be noted that 11,000 miles of the 16,000 miles of seismic data were returned to Plaintiff. Tr:721-25, 728-29; Ex. 169, 179, 180. Thus, to the extent that there was an "improper" transfer to a Kerr-McGee subsidiary after the merger (and there was not), there is no legally sufficient evidentiary basis for holding Defendants liable, under a misappropriation of trade secrets theory, for the entire 16,000 miles of Oryx seismic data. At most, Defendants could be held liable only for the 5,000 miles of Oryx seismic data that was not returned. There simply is no evidence that Defendants or Kerr-McGee "misappropriated" the 11,000 miles of Oryx seismic data by "transferring control" of the data to a Kerr-McGee subsidiary; as to the 11,000 miles of Oryx data, Kerr-McGee "transferred control" of that data back to Plaintiff.

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II.

AS FOR THE CLAIM CONCERNING THE 3,100 MILES OF SEISMIC DATA (CATEGORY 3 ABOVE) THIS COURT SHOULD AT LEAST GRANT A NEW TRIAL. For all the reasons explained in Part I, this Court should render judgment for Defendants

on Plaintiff's breach of contract and misappropriation of trade secrets claims relating to the 16,000 miles of seismic data (category 1 above) and on Plaintiff's breach of contract claim relating to the 760 miles of Kerr-McGee seismic data (category 2 above. The only remaining category of seismic data at issue in this case is the 3,100 miles of seismic data from an unknown source (category 3 above). Even as to the misappropriation claim relating to this 3,100 miles of data (which Plaintiff refers to as "bootleg" data), no judgment for Plaintiff is proper. Instead, the Court should order a new trial on the misappropriation claim relating to the 3,100 miles of data. A. The Jury's $25,266,381 Damage Award for Misappropriation of Trade Secrets Was the Result of Passion or Prejudice.

If the amount of a jury's damages award is "so excessive as to shock the judicial conscience and to raise an irresistible inference that passion, prejudice, corruption or other improper cause invaded the trial," the court must order a new trial. Malandris, 703 F.2d at 1168; see also Mason, 948 F.2d at 1560-61; Dunn, 1 F.3d at 1383. That is exactly what occurred here with respect to the jury's damages findings for misappropriation of trade secrets. 1. In Section C, the jury was asked only whether Defendants misappropriated the 16,000 miles of Oryx seismic data (category 1 above) and the 3,100 miles of seismic data (category 3 above).

It is clear from this Court's instructions that the only seismic data inquired about in Question C1(a) was the 3,100 miles of seismic data from an unknown source and that the only seismic data inquired about in Question C1(b) related to the 16,000 miles of Oryx seismic data acquired by Kerr-McGee through its merger. Question C1(a) and C1(b) specifically referred the

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jury to Instruction No. 3.3.2 in the Court's charge, which instructed the jury: "To find in favor of M.D. Mark on its claim that Kerr-McGee `misappropriated' its trade secret, you must find that any one of the following statements is true: (a) Kerr-McGee Corporation gained access to and possessed approximately 3100 miles of PGI Data through improper means; Kerr-McGee Corporation, after the merger with Oryx, wrongfully transferred control of the PGI Data from Oryx, or Oryx's previously wholly owned subsidiary Sun Operating Limited Partnership, to a subsidiary of Kerr-McGee Corporation."

(b)

Jury Instruction No. 3.3.2. Thus, with respect to the claim for misappropriation of trade secrets, only categories 1 and 3 of the seismic data were at issue ­ i.e., the 16,000 miles of Oryx seismic data and the 3,100 miles of alleged "bootleg" data. No misappropriation of trade secrets claim was submitted for the 760 miles of Kerr-McGee seismic data (category 2). 2. The jury's award of $25,266,381 in damages for misappropriation exceeds, on a per-mile basis, the highest figure claimed by Plaintiff as an appropriate "license" fee for small transfers.

If one could assume that the jury awarded damages proportionally for the 16,000 miles of seismic data (category 1 above) and the 3,100 miles of data (category 3 above) ­ or a total of 19,100 miles of alleged "misappropriated" seismic data ­ the jury's award of $25,266,381 in damages translates to an award of $1,322.85 per mile of seismic data. But that is substantially higher than even the highest per-mile license fee figure suggested by Plaintiff at trial. The highest per-mile figure suggested by Plaintiff's evidence was the $1,200 or $1,250 per-mile figure that Ms. Davies testified normally applies to licenses of smaller amounts of seismic data (less than 50 or 20 miles). But that $1,200 to $1,250 per-mile figure would not apply to the

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license of large volumes of seismic data, such as the 3,100 miles of so-called "bootleg" data or the 16,000 miles of Oryx seismic data to a Kerr-McGee subsidiary. Tr:345-46, 869. In fact, what Ms. Davies normally seeks when there is a "transfer" of seismic data (which is how Plaintiff characterizes what occurred in connection with the 16,000 miles of Oryx data) is a "transfer" fee of $200 per mile, an amount that M.D. Mark failed to prove it had ever received on a "bulk transfer" of 16,000 miles of seismic data. Tr:869-70. But even if one could or did assume that the jury could infer that M.D. Mark was entitled to a transfer fee of $200 per mile with respect to the 16,000 miles of Oryx seismic data, that would mean (1) that the jury awarded $3,200,000 for the 16,000 miles of Oryx data, and (2) that the jury awarded the remainder of the $25,266,381 ­ over $22 million ­ for the 3,100 miles of alleged "bootleg" data. Such an award of $22 million for 3,100 of alleged "bootleg" data would translate to a per-mile award for the 3,100 miles of almost $7,100 per mile. There is no evidence to suggest that $7,100 per mile would be an appropriate fee for 3,100 miles of seismic data. At most, the evidence showed that the 3,100 miles of seismic data was worth $100-200 per mile. Tr:1204. 3. No matter how interpreted, the jury's $25,266,381 verdict is shockingly excessive and is contrary to this Court's instructions.

No matter how one seeks to interpret what the jury found with respect to damages for misappropriation of trade secrets, one thing is clear: The jury's verdict in Question C2, finding that Kerr-McGee's misappropriation of trade secrets caused Plaintiff to sustain damages of $25,266,381, is the result of passion and prejudice and constitutes an obvious attempt by the jury to punish Kerr-McGee. That type of punishment is inappropriate for compensatory damages, and this Court instructed the jury not to award punitive damages. See Instruction 3.6

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("Compensatory damages are not allowed as a punishment and cannot be imposed or increased to penalize a party found to be liable."). Indeed, the only way to assume that the jury was not "punishing" Kerr-McGee through its award (and to bring the jury's damages verdict in line with the $1,250 per-mile figure suggested by Plaintiff) is to assume that the jury awarded damages in Question C2 for the 16,000 miles of Oryx data (category 1 above), the 3,100 miles of alleged "bootleg" data (category 3 above), and the 760 miles of Kerr-McGee licensed seismic data (category 2 above). However, as already explained, no misappropriation of trade secrets claim was made, or submitted to the jury, as to the 760 miles of Kerr-McGee licensed data. Thus, if the verdict is so construed, a new trial would have to be granted because the jury would have improperly included awards for seismic data that was not alleged to have been misappropriated ­ contrary to the Court's charge. At bottom, one of two things are true: (1) either the jury included category 2 of the seismic data in awarding damages for misappropriation of trade secrets (which it was not permitted to under the Court's charge and instructions); or (2) the jury sought to punish Defendants, again contrary to this Court's instructions. And as explained below, see infra Part III.B, this is not the only situation where the jury expressly disregarded the Court's charge. Where the jury repeatedly contravenes the Court's charge, a new trial is required. B. A New Trial on the Damages for the 3,100 Miles of Alleged "Bootleg Data" Is Also Required Because There Is No Way to Know What Amount of the $25 Million Lump Sum Damages Amount Was Attributable to That 3,100 Miles.

There is another reason why the Court should grant a new trial as to the 3,100 miles of alleged "bootleg" data. Over Kerr-McGee's objection, this Court refused to submit a special verdict form that would have asked the jury, in connection with Plaintiff's misappropriation of

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Document 275

Filed 10/12/2007

Page 34 of 50

trade secrets claim, to find damages separately for (a) the 3,100 miles of alleged "bootleg" data and (b) the 16,000 miles of Oryx seismic data allegedly transferred to a Kerr-McGee subsidiary. See Tr:1257, 1259; see also Defendant's Proposed Special Forms of Verdict (Doc. 248), p.4-5. Because, as to the 16,000 miles of Oryx data, the claim for misappropriation of trade secrets fails as a matter of law (for all the reasons explained in Part I.C., supra), there is (1) no way of knowing what portion of the $25,266,381 in damages found by the jury as a lump sum is attributable to the 3,100 miles of alleged "bootleg" seismic data, and thus, (2) no reasonable way to break out the sum awarded for that misappropriation claim as to that 16,000 miles of Oryx seismic data. For example, this Court cannot tell whether the jury, in awarding damages for the 3,100 miles of seismic data (category 3 above), used the $1,250 per-mile figure, a $200 per-mile figure, or some other, much higher figure (such as a $7,100 per-mile figure). Under federal law, a new trial is required where a broad issue is submitted (here the broad, lump-sum damages issue) subsuming multiple theories of liability, and one of those multiple theories fails as a matter of law or is infected with