Arturo Gonzalez, Morrison & Foerster partner (Jason Doiy / The Recorder)
SAN FRANCISCO — In a matchup of two experienced Bay Area trial lawyers this week, Morrison & Foerster ultimately came out on top with a win for client Kaiser Permanente.
After a three-week trial, an Alameda County Superior Court jury sided with Arturo Gonzalez, chairman of Morrison & Foerster’s commercial litigation and trial practice group. The jury dismissed a claim filed against the health-care giant by Phaedrus Internet Development Inc. for services rendered but not paid. Gonzalez faced off against trial attorney Allen Ruby, a partner with Skadden, Arps, Slate, Meagher & Flom.
“We were very pleased with the verdict,” Gonzalez said. “We had a very strong team. We believed in our case.”
Ruby did not respond to a voicemail and email seeking comment.
Phaedrus had claimed Kaiser Foundation Health Plan Inc. and The Kaiser Permanente Medical Group Inc. owed more than $500,000 for services Phaedrus provided to store and maintain Kaiser patients’ digital medical images.
Phaedrus entered into an oral contract with Kaiser in 2005, according to the complaint. In 2008, Kaiser stopped working with Phaedrus and instead took up a contract with another data storage company.
Phaedrus filed a suit in 2010 alleging breach of contract and misappropriation of trade secrets. But Superior Court Judge Dennis Hayashi tossed those claims before trial.
“The terms of the alleged contract between Phaedrus and Kaiser are simply too indefinite to allow the court to determine what the parties agreed to do, and what would constitute a breach of their obligations,” Hayashi wrote in February.
That left the claim for payment, which required proof that Kaiser requested Phaedrus’ services. “They were not able to get over that hump,” Gonzalez said.
It was Phaedrus founder, former Kaiser physician Dr. Steven Williams, who solicited Kaiser, Gonzalez argued. Williams asked Kaiser to try out the Phaedrus data storage system for free.
“This is America,” Gonzalez said. “I have no problem with someone trying to sell a product, but you can’t offer something for free and then try to charge for it.”
Phaedrus also alleged that Kaiser took no measures to secure sensitive patient information left in Phaedrus’ possession after ending the business relationship in breach of the Health Insurance Portability and Accountability Act.
“The patient data at issue has remained on plaintiff’s system, and the [protected health information] in question implicates the ongoing management and care of almost 2,800 of defendants’ patients and encompasses more than 100,000 individual pieces of information,” the complaint states.
“The jury apparently agreed with our version,” Gonzalez said. The judge instructed Phaedrus and Kaiser to discuss the transfer of medical data back to Kaiser.
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