Steady State Imaging, LLC v. General Electric Company

Background

Steady State Imaging, LLC (SSI) developed SWIFT, a magnetic resonance imaging technique. In 2011, SSI and General Electric Company (GE) entered an asset purchase agreement (APA) concerning the technology’s potential commercial development. The APA required GE to create an advanced technology development program for SWIFT, but it did not require GE to commercialize SWIFT. If GE chose to commercialize the technology, the APA required royalty payments to SSI.

SSI sued GE in 2017. Its amended complaint asserted four claims: breach of the APA, breach of the implied covenant of good faith and fair dealing, breach of later agreements allegedly requiring GE to commercialize SWIFT, and promissory estoppel. The court had previously dismissed the implied-covenant claim and determined that the APA itself imposed no obligation to commercialize SWIFT. The motions addressed in this opinion were GE’s motion for summary judgment and both sides’ motions to exclude expert testimony.

Summary Judgment on the APA Claim

The court held that the APA was ambiguous about what it meant for GE to “create” or complete the required SWIFT advanced technology development program. The court therefore did not decide whether GE fulfilled those obligations. It nevertheless granted summary judgment for GE on Count I because SSI did not establish damages caused by the alleged breach.

SSI sought expectation damages based on royalty payments it might have received if GE had commercialized SWIFT. The court concluded that SSI could not show GE would have chosen to commercialize SWIFT, because the APA left that decision to GE’s discretion. The court also rejected SSI’s lost-opportunity theory because SSI had not shown that an alternative agreement with Siemens would have produced profits. The court therefore granted GE’s motion for summary judgment on Count I.

Later Agreements and Promissory Estoppel

SSI alleged that GE made later promises to commercialize SWIFT at or after meetings in 2011, 2013, and 2014. The court rejected GE’s argument that the APA’s integration clause prevented oral modifications. Under the applicable Minnesota rule, the parties could modify or rescind a written contract through an oral agreement even when the written contract required changes to be in writing.

The court also rejected GE’s argument that the alleged agreements were barred by Minnesota’s statute of frauds, which generally requires a writing for agreements that cannot be performed within one year. The court interpreted the APA’s ten-year payment-period provision as describing what would happen if GE commercialized SWIFT, rather than establishing a minimum performance period.

For the alleged September 2014 agreement, the court found factual disputes about whether the parties agreed that GE would pursue commercialization and whether SSI provided consideration. SSI presented evidence that it assisted GE, spent substantial resources developing a commercialization proposal, and refrained from pursuing legal action after GE’s promise. The court also found factual disputes about the alleged 2011 and 2013 promises. It therefore denied GE’s motion for summary judgment on Count III.

The court likewise denied summary judgment on Count IV, SSI’s promissory-estoppel claim. It found evidence that SSI incurred reliance damages after GE’s alleged promises, including work with Stanford and HeartVista. The court also found evidence from which a jury could conclude that GE made clear and definite promises intended to induce reliance. The court did not decide that GE breached a later contract or was liable for promissory estoppel; it held only that those claims could proceed because genuine factual disputes remained.

Expert Testimony

The court denied SSI’s motion to exclude testimony from GE’s experts, Dr. Bruce Rosen and Mark Gallagher. It found that Rosen’s technical opinions about GE’s development program and the comparative costs of SWIFT and RUFIS were supported by his expertise and the record. It found Gallagher qualified to address market demand and determined that his damages opinions had adequate factual support. The court also allowed testimony concerning how alternative silent-MRI technologies might affect SSI’s claimed royalty damages.

The court denied GE’s motions to exclude testimony from Dr. Jurgen Hennig, Dr. Michael Garwood, and Donald Gorowsky. It found Hennig qualified to address MRI technology and the feasibility of implementing SWIFT on GE scanners, and found Garwood’s opinions sufficiently supported by his experience with SWIFT and MRI scanners. The court also allowed Gorowsky’s damages testimony because the APA’s payment provisions could serve as a reasonable proxy and his methods were sufficiently supported. The court stated that objections to his assumptions could be addressed by challenging his credibility rather than excluding his testimony.

Order

The court ordered that GE’s motion for summary judgment was GRANTED in part and DENIED in part. SSI’s motion to exclude expert testimony was DENIED, and GE’s two motions to exclude expert testimony were DENIED. The opinion was signed by Chief Judge John R. Tunheim.