Boston Scientific Corp. v. Mirowski Family Ventures, LLC
186 WRIGHT, J. This appeal rises from the judgment of the Circuit Court for Montgomery County in favor of the appellee-plaintiff, Mirowski Family Ventures, LLC (“MFV”), 1 against appellant-defendant, Boston Scientific Corporation (“BSC”), in the amount of $86,536,857.00 for royalties owed for 2002 and 2003, $142,612,000.00 for damages in an Indiana lawsuit, and $80,200,000.00 for damages in a Delaware lawsuit. BSC presents these questions for review: 1. Whether the circuit court erred in granting summary judgment that BSC had breached the “right to participate” provision of the 2004 License Agreement despite genuine dispute of material facts. 2. Whether the circuit court erred in its interpretation of the “mutual agreement” provision of the 2004 License Agreement and in arriving at such an interpretation despite determining that the provision was ambiguous. 3.
Whether the circuit court erred in allowing the unsubstantiated testimony of Roderick McKelvie in support of MFV’s Improper Agreement claim and in denying BSC’s JMOL and JNOV motions as to that claim, which were made on the ground that the claim depended on Mr. McKelvie’s unsubstantiated testimony. 4. Whether the circuit court erred in excluding evidence of St. Jude’s invalidity defenses in the St. Jude Delaware litigation and whether, as result, the jury’s verdict in damages award on the Delaware component of MFV’s Improper Agreement claim should be vacated. 5. Whether the circuit court erred in allowing the “reasonable settlement” damages opinion of Dr. Mohan Rao, which failed to take into account St. Jude’s settlement positions in the St. Jude Indiana and St. Jude Delaware Litigations; and whether, as a result, the jury’s damages awards for the Improper Agreement claim should be vacated. 187 6. Whether the jury’s damages award for the Improper Agreement claim should be vacated because they relied on premises that contradicted the historical record of the St. Jude Indiana and St. Jude Delaware Litigations. 7.
Whether judgment should be entered in BSC’s favor with respect to MFV’s Accrued Royalties claim because the primary theory on which MFV relied was legally erroneous. 8. Whether the jury’s verdict with respect to MFV’s Accrued Royalties claim should be vacated because of the circuit court’s erroneous rulings on the patent law issues on which MFV’s alternative theories depended, including the circuit court’s refusal to instruct the jury on issues of patent law. 9. Whether the circuit court erred in deciding as a matter of law prior to trial that MFV was entitled to “accrued royalties” for overseas sales of ICDs in contravention of Federal Circuit precedent. For the reasons discussed below, we affirm the circuit court.
FACTS AND PROCEDURAL HISTORY I. Patent origins and the BSC license agreements Dr. Michel Mirowski developed an implantable cardiac defibrillator (“ICD”), a device that is implanted in the body and capable of preventing sudden cardiac death. Since the first patient received the ICD in 1980, millions of others have had the device implanted. Later on, cardiac resynchronization therapy (“CRT”), building on the ICD technology, was invented to treat congestive heart failure. Dr. Mirowski, and through what later became MFV, owned the patents to both inventions: the ICD 2 is covered by patent 4,407,288 (“the ‘288 patent”), and the CRT technology is covered by patent RE38,119 (“the ‘119 patent”). 188 MFV originally licensed the two patents exclusively to Guidant, a corporate entity later acquired by BSC, in 1973 (“1973 License Agreement”).
The licenses were then restated in 2004 (“2004 License Agreement”). The licenses gave Guidant (and subsequently BSC) the rights to sublicense any or all of the MFV patents on its own terms, as long as MFV received a 3% royalty on the initial sale as well as the sale of covered products. Guidant also received “the right to bring and conduct suit or actions in its name against others for infringement of any [licensed] patent ..., the same as if such patent were the exclusive property of GUIDANT.” Importantly, the license agreement reserved for MFV certain litigation rights: 3 (1) BSC must obtain MFV’s “mutual agreement” to “bring or conduct” litigation; 4 (2) MFV has the “right to participate” in litigation; and (3) MFV and BSC must “divide [ ] equally” any proceeds of infringement litigation.
II
Lawsuits against St. Jude a. St. Jude litigation in Indiana regarding the ‘288 patent In 1996, Guidant 5 and MFV, as joint plaintiffs, through mutual agreement, sued St. Jude in Indiana federal court for selling ICD devices without a sublicense for the patents (“St. Jude Indiana Litigation”). The jury returned a verdict in favor of Guidant and MFV for the sum of $140 million, finding 189 that St. Jude had infringed the ‘288 patent. The trial judge reversed the jury verdict on motion for judgment notwithstanding the verdict (“JNOV”), ruling that the patent was invalid.
Guidant and MFV mutually agreed to appeal the court’s decision as to a key “method claim” 6 of the ‘288 patent (“Claim 4”). 7 While the St. Jude Indiana Litigation was on appeal, Guidant and MFV entered into an agreement (“the 2004 Royalty Agreement”) in which Guidant “suspended payment of royalties on products covered by the ‘288 Patent pending the outcome of the appeal.” The agreement then outlined: (1) if there is a “final non-appealable judgment” that the ‘288 patent was valid and St. Jude did infringe upon it, Guidant would pay MFV “a sum equal to all royalties that accrued pursuant to the License Agreement on products covered by any such claims” from the date the royalties were suspended until they became reinstated, along with interest at 190 the prime rate; 8 and (2) if the Federal Circuit found that St. Jude did not infringe the ‘288 patent, Guidant would pay MFV a flat sum of $15 million. In August 2004, the appellate court remanded the St. Jude Indiana case, holding that the ‘288 patent was not invalid. On remand, the district court found that at least some St. Jude devices were used according to the patented method, but limited damages to only those devices that were proved to have infringed on the patented method, not on every device capable of performing the patented method. b. St. Jude Litigation in Delaware Regarding the ‘119 Patent Guidant and MFV brought a second suit against St. Jude in the U.S. District Court for the District of Delaware for allegedly infringing the ‘119 patent (“the St. Jude Delaware case”) in 2004.
After two years, the parties completed fact discovery but the issues in dispute had not been considered by the court.
III
BSC acquires Guidant and Settles with St. Jude In April 2006, BSC completed its purchase of Guidant and became the exclusive licensee to the MFV patents. BSC then began discussing a settlement with St. Jude (“the BSC-St. Jude Settlement”) that included not only unresolved issues from the St. Jude Delaware case and the St. Jude Indiana Litigation, but also “a number of other cases in which BSC was adverse to St. Jude.” MFV asserts that these were cases “that presented a serious risk to BSC and had nothing to do with Mirowski.” The parties disagree as to whether MFV was given sufficient notice of the BSC-St. Jude Settlement discussions. 9 Although MFV claims the BSC-St. Jude Settle 191 ment discussions were held in secret, MFV also met with St. Jude to discuss the Indiana and Delaware cases, but a settlement was never reached between the two parties. MFV maintains that as a result of its failed negotiations with St. Jude, it “believed settlement with St. Jude was off the table,” and was thus surprised to hear of the BSC-St. Jude Settlement. The BSC-St. Jude Settlement dismissed four pending litigations by St. Jude against BSC in exchange for the value of the Indiana and Delaware cases. 10 MFV claims that a BSC expert valued the damages in the St. Jude Delaware case at at least $131 million before the BSC-St. Jude Settlement, and then after the settlement at only $16.8 million.
MFV asserts that the “87% drop in damages [ ] was directly attributable to the BSC-STJ Settlement.” MFV continued with the Delaware and Indiana cases against St. Jude. In July 2007, MFV and St. Jude settled the Delaware case for $35 million dollars. The Indiana case continued until 2009, when the Federal Circuit again concluded that the ‘288 patent was not invalid and that St. Jude had infringed it, and MFV settled the remnants for $1.9 million.
IV
Litigation between BSC and MFV After learning of the BSC-St. Jude Settlement, MFV informed BSC that BSC had breached the 2004 License Agreement because (1) the separate negotiations deprived MFV of the “right to participate” in the St. Jude litigations and caused damages, and (2) BSC failed to obtain MFV’s “mutual agreement” before entering into the BSC-St. Jude settlement. Further, BSC did not pay MFV the amount of •royalties agreed upon in the 2004 Royalty Agreement that 192 determined what BSC owed MFV at the end of the St. Jude Indiana Litigation. Because the ‘288 patent was deemed valid and St. Jude found to have infringed upon it, BSC owed MFV “a sum equal to all royalties that accrued” between 2002-2003, plus interest. While both parties agreed that “the sum” plus interest equaled over $86.5 million dollars, BSC paid MFV only $6.7 million of this amount.
BSC based this amount on its interpretation that royalties were due only the percentage of St. Jude devices that allegedly infringed the ‘288 patent in the St. Jude Indiana Litigation, excluding royalties on devices and accessories that BSC had paid in the past pursuant to the 2004 License Agreement. i. BSC sues MFV for declaratory judgment in Indiana Federal Court On May 31, 2011, Boston Scientific filed its “Complaint for Declaratory Judgment” seeking declaratory judgments that, among other things, the payments it had made to MFV satisfied its royalty obligations under the 2004 License Agreement. After several pre-trial motions, BSC brought to the court’s attention Gunn v. Minton, - U.S. -, 133 S.Ct. 1059 , 185 L.Ed.2d 72 (2013), a Supreme Court decision handed down while the parties were preparing for trial. Gunn limited the jurisdiction of federal courts to hear certain cases pertaining to patent law.
BSC “suggested that, pursuant to [the] holding [in Gunn ], the [Indiana District] Court lacked subject matter jurisdiction over this case.” Mirowski Family Ventures, LLC v. Bos. Sci. Corp., 958 F.Supp.2d 1009, 1010 (S.D.Ind.2013). 11 The district court agreed and dismissed the case for lack of subject matter jurisdiction. Id. at 1018 . 193 ii.
MFV commences litigation in Montgomery County. MFV filed the suit from which this appeal arises in the Circuit Court for Montgomery County after BSC argued that the Indiana District Court lacked jurisdiction, and the Montgomery County case proceeded after the federal case was dismissed. Prior to trial, the circuit court granted MFV’s motion for summary judgment that BSC breached MFV’s “right to participate” as outlined in the 2004 Royalty Agreement. After three weeks of trial, the jury returned a verdict in favor of MFV.
On the claim of royalties owed, the jury awarded MFV the full stipulated value of $86.5 million; on the claim for breach of the 2004 License Agreement related to the BSC-St. Jude Settlement, the jury returned a verdict for less than MFV requested, but still amotmting to $222 million for both the Delaware and Indiana cases. Additional facts will be included in the discussion as they become relevant. Discussion I. The circuit court committed no errors with respect to the “Improper Agreement” claim, a. The circuit court appropriately granted partial summary judgment in favor of MFV that BSC breached the “right to participate” provision of the 2004 License Agreement.
BSC avers that the circuit court wrongly granted partial summary judgment in MFV’s favor when it ruled that there was no genuine dispute of material fact as to whether the July 2006 Agreement between BSC and St. Jude violated MFV’s contractual “right to participate.” 12 The reviewing court reviews an order granting summary judgment de novo, conducting “an independent review of the record to determine 194 if there is a dispute of material fact.” Injured Workers’ Ins. Fund v. Orient Exp. Delivery Serv., Inc., 190 Md.App. 438, 450-51 , 988 A.2d 1120 (2010) (citation omitted). In our review of the granted summary judgment, we must “examine the same information from the record and determine the same issues of law as the trial court.” La Belle Epoque, LLC v. Old Europe Antidue Manor, LLC, 406 Md. 194, 209 , 958 A.2d 269 (2008) (citation omitted).
We therefore “only look to the evidence submitted in opposition and support of the motion for summary judgment in reviewing the trial court’s decision to grant the motion.” Id. (citations omitted). In its brief, however, BSC relies entirely on the evidence presented during the trial. Because we must examine the information the circuit court relied on to make its decision, evidence from the trial is not relevant to our review.
While the volumes of record extract contain the transcript of the hearing before the circuit court regarding summary judgment as well as BSC’s opposition brief to MFV’s motion for partial summary judgment, those extracts alone do not place us in an adequate position to review the record de novo. See Boland v. Boland, 423 Md. 296, 366 , 31 A.3d 529 (2011) (explaining that an appellate court must “independently review the record to determine whether” a dispute of material fact exists). BSC, as the appellant, is tasked with the responsibility of directing this Court to the portions of the record relevant to its challenge. As we have previously stated, the reviewing court “cannot be expected to delve through the record to unearth factual support favorable to [the] appellant.” Rollins v. Capital Plaza Assocs., L.P., 181 Md.App. 188, 201 , 955 A.2d 869 (2008) (citing von Lusch v. State, 31 Md.App. 271, 282 , 356 A.2d 277 (1976)).
Even if we could consider BSC’s argument on the merits based on the evidence on which it relies, we would nevertheless affirm the circuit court’s granting of partial summary judgment. BSC claims that a dispute of material facts exists regarding the “right to participate” provision because BSC and MFV disagree on whether MFV did, in fact, participate. BSC maintains that MFV had an equal chance to participate 195 in its dealings with St. Jude because 1) MFV had its own settlement negotiations with St. Jude, and 2) MFV knew that BSC was having discussions with St. Jude but never asked to join in those discussions. While MFV does not dispute that those two things are true, BSC neglects to note the timing of the two 2006 settlement discussions: MFV’s discussions with St. Jude occurred in June of 2006 and concluded without reaching an agreement, whereas the BSC-St. Jude discussions took place through June and July of 2006, leading to the BSC-St. Jude Settlement on July 29, 2006.
While MFV knew that BSC was negotiating with St. Jude in June, it was unaware that negotiations between the two carried into July. 13 BSC offers no evidence to show that MFV knew of the July discussions. Thus, the material facts — MFV’s lack of knowledge about the BSC-St. Jude Settlement — are undisputed. No evidence at trial showed otherwise. b. The circuit court did not err in allowing the jury to decide whether BSC violated the “mutual agreement” provision of the 2004 License Agreement.
Next, BSC argues that “the circuit court erred by allowing the jury to find that BSC breached the ‘mutual agreement’ provision.” The provision reads: “[BSC] shall, subject to mutual agreement between [BSC] and MIROWSKI, bring and conduct suit or actions against any infringer____” BSC moved for summary judgment on the issue, which the circuit court denied, finding the term unambiguous. At trial, the circuit court instructed the jury on its interpretation of the term. 14 BSC challenges this interpretation as well as the jury’s deci 196 sion on the issue. On review, we find that the circuit court did not err in interpreting the provision and in allowing the jury to determine whether BSC breached it, and we will not overturn the findings of the jury. i. The circuit court’s interpretation of the “mutual agreement” provision was appropriate.
Again, we review the circuit court’s decision of a motion for summary judgment de novo. Injured Workers’ Ins. Fund, 190 Md.App. at 450-51 , 988 A.2d 1120 . When reviewing the denial of summary judgment, we look to see if there existed a genuine dispute of material facts.
Id. When reviewing contract construction, the circuit court may grant summary judgment if a contract is unambiguous. GMG Capital Invs., LLC v. Athenian Venture Partners I, L.P., 36 A.3d 776, 778 (Del.2012). Our review of the court’s determination of whether the contractual language is ambiguous is also de novo.
Calomiris v. Woods, 353 Md. 425, 435 , 727 A.2d 358 (1999). BSC relies heavily on the Indiana contract proceedings, in which the federal district judge found the “only reasonable interpretation of the phrase ‘subject to mutual agreement’ in the contract is that [BSC] must bring and conduct suit against infringers with sales exceeding $75,000, unless Mirowski and [BSC] agree that suit should not be brought.” Boston Scientific Corp. v. Mirowski Family Ventures, LLC (“BSC 2012”), No. 1:11-CV-736-WTL-DKL, 2012 WL 5996482 (S.D.Ind., Nov. 30, 2012) (emphasis in original). What this means, the district judge explained, is that “ ‘mutual agreement’ applies not to [BSC’s] subsequent decisions in the course of litigation, but rather explains the circumstances under which [BSC] is relieved of its obligation to bring suit.” Id. The judge, therefore, found the “mutual agreement” provision inapplicable to the BSC-St. Jude Settlement.
Id. Accordingly, as the circuit court observed, the Indiana district court’s construction leaves the “right to participate” provision as “the only ground for potential contractual liability.” 197 We are not bound to afford any weight to the decisions and findings of the Indiana district court deciding the contractual dispute between MFV and BSC. See Cates v. State, 21 Md.App. 363, 372, 320 A.2d 75 (1974) (explaining that rulings from other jurisdictions are persuasive authority, and “[i]f the reasoning which supports them fails to persuade, they are no authority at all”). Unlike the Indiana district court, the circuit court found “mutual agreement” to be an unambiguous term meaning: BSC must consult with and advise Mirowski of its intentions at such a time and under such circumstances that would enable Mirowski to take action to protect itself, if it chooses to do so.
Whether that occurred in this case, is a question of fact. The circuit court stated that the contract term is an “express promise” made by BSC to MFV that is not irrelevant. A contract is not ambiguous merely “because the parties disagree as to its proper construction,” Trustees of Indiana Univ. v. Cohen, 910 N.E.2d 251, 257 (Ind.Ct.App.2009), but rather is ambiguous “only if reasonable persons would differ as to the meaning of its terms.” Oxford Fin. Grp., Ltd. v. Evans, 795 N.E.2d 1135, 1142 (Ind.Ct.App.2003) (citations omitted).
When interpreting an unambiguous contract, “a court gives effect to the parties’ intentions as expressed in the four corners of the instrument and clear, plain, and unambiguous terms are conclusive of that intent.” Id. (citation omitted). However, “the court is under an obligation to read the agreement in a manner which harmonizes its provisions as a whole and to give effect to the parties’ expressed intent.” Trustees of Indiana Univ., 910 N.E.2d at 257 (citations omitted); see also Oxford Fin. Grp., Ltd., 795 N.E.2d at 1142 (“Particular words and phrases cannot be read alone and the parties’ intentions must be determined by reading the contract as a whole.”) (Citation omitted).
Looking at the “mutual agreement” provision in the context of the 2004 License Agreement “as a whole,” id., we agree that the term is unambiguous because reasonable persons 198 would not differ as to its meaning when the provision is read as a whole rather than examining each phrase therein in isolation. Oxford Fin. Grp., Ltd., 795 N.E.2d at 1142 . The 2004 License Agreement overall outlines the rights and responsibilities of BSC and MFV individually and to each other with regard to the ‘299 patent.
It affords BSC the exclusive license to MFV’s patents and the right to bring suit to protect them. MFV, as the patent holder, therefore, has a serious stake in the outcome of any potential dispute or litigation between BSC and infringers. Thus, construing the portion of the contract that calls for “mutual agreement” to “bring and conduct suit or action against infringers” to mean anything short of the obligation BSC has to inform and seek MFV’s advice on its actions in a suit would require reading the contract to mean that MFV reserved no authority for itself to have a say or impact the status of its patents once litigation commenced. Such a reading of the contract, as the circuit court and MFV point out, would permit BSC to act in bad faith by settling without MFV’s permission.
No reasonable person could read the agreement that way. Furthermore, the interpretation of the Indiana district court, which BSC urges us to adopt, is that the “mutual agreement” provision merely “explains the circumstances under which Boston Scientific is relieved of its obligation to bring suit,” but does not apply to BSC’s “subsequent decisions in the course of litigation.” However, the language of the agreement reads that “[BSC] shall, subject to mutual agreement between [BSC] and MIROWSKI, bring and conduct suit or actions____” (Emphasis added). The Indiana district court’s construction completely disregards the term “conduct,” which immediately follows the provision “subject to mutual agreement.” A reading of the plain language of the agreement urges the circuit court’s interpretation. Accepting the circuit court’s interpretation of the provision, we also conclude that it appropriately instructed the jury as to what “mutual agreement” means. 199 ii.
The matter was appropriately considered by the jury, whose factual finding was proper. BSC next argues that the jury did not have sufficient evidence to find that BSC violated the “mutual agreement” provision, even as interpreted by the circuit court, and asks us to overturn the jury’s factual finding. We disagree with BSC and see no reason to overturn the jury’s finding. A case must be submitted to the jury for consideration if there exists “any evidence, no matter how slight, that is legally sufficient to generate a jury question.” Publish Am., LLP v. Stem, 216 Md.App. 82, 97 , 84 A.3d 237 (2014) (citation omitted).
There was ample evidence presented at trial to present the question to the jury. The jury heard testimony on the issue from: Sidney Silver, MFV’s counsel; Ginat Mirowski; and four of BSC’s in-house counsel. BSC also presented its own fact witnesses. There being “sufficient” evidence to send the question to the jury, “the jury and the jury only has the power to assess the weight of the evidence, a power which passes to the trial judge’s discretion upon motion for a new trial.” Owens-Corning Fiberglas Corp. v. Garrett, 343 Md. 500, 521 , 682 A.2d 1143 (1996) (citation omitted).
The reviewing court “do[es] not review the weight of the evidence after it has been passed upon by the jury.” Benkoe v. Plastic Assembled Prods., Inc., 231 Md. 419, 420 , 190 A.2d 638 (1963) {per curiam). Because the question was appropriately presented to the jury, and the jury properly made its determination, we will not disturb its finding.
II
The jury appropriately found “causation” in the breach of contract claim between BSC and MFV. “Under Indiana law ..., causation is an essential element of liability in a breach of contract claim.” Shepard v. State Auto. Mut. Ins. Co., 463 F.3d 742, 744 (7th Cir.2006) (citation omitted).
The aggrieved party in a contract claim “must prove that the alleged breach of contract was a cause in. fact of his loss, which requires a showing that the breach was a ‘substantial factor’ in bringing about the plaintiffs damages.” Id. (citation omitted). BSC argues that MFV failed to show 200 such “causation” for its damages in this case because MFV had a “choice” regarding whether to accept the terms of the BSC-St. Jude Settlement. Because of this choice, BSC suggests that its actions were not a “cause in fact” in MFV’s damages.
BSC asks for a remand and new trial on the basis of “causation” because the circuit court should not have admitted the MFV-St. Jude Stipulation Agreement (“the stipulation”), 15 also signed by BSC, that the ‘119 patent was not invalid. 16 BSC contends first that the admission of the stipulation is in violation of Rule 408 of the Federal Rules of Evidence, and thereby Md. Rule 5^08, 17 and, therefore, constitutes reversible error. Second, it argues that the stipulation in not binding on BSC. We disagree. Maryland Rule 5 — 408 states: “(a) The following evidence is not admissible to prove the validity, invalidity, or amount of a civil claim in dispute: ...
(3) Conduct or statements made in compromise negotiations or mediation.” BSC, invoking Md. Rule 5-408 in this context, requires that the stipulation of validity be a statement “made in compromise negotiations or mediation.” Id. BSC notes, however, that the stipulation was entered into “following a good-faith mediation.” (Emphasis added). As we have previously noted about the admission of settlements as subsequent evidence: 201 The purpose of Rule 5-408 is to encourage the settlement of lawsuits by ensuring that parties need not fear that their desire to settle pending litigation and their offers to do so will be construed as admissions. But that rule is plainly not applicable to the instant case because the evidence at issue concerned previously settled claims and not promises to settle an existing claim.
Bittinger v. CSX Transp. Inc., 176 Md.App. 262, 276-77 , 932 A.2d 1243 (2007) (internal citation omitted). As in Bittinger , Md. Rule 5-408 is equally inapplicable here because the ‘119 patent validity stipulation was part of a “previously settled claim[ ],” not a “promise[ ] to settle.” Id. Talks and discussions taking place during mediation and negotiation meetings are part of the “promises to settle,” and it is the statements made during these discussions that are barred by Md. Rule 5-408, not the finished product coming out of them. “[T]he admission of evidence is committed to the considerable and sound discretion of the trial court” and will not be disturbed in the absence of abuse of that discretion.
Id. at 273 , 932 A.2d 1243 . We see no such abuse here, and therefore will not remand on this basis. The properly admissible stipulation operated like a “consent judgment and adjudication on the merits.” 18 In the alternative, accepting that the stipulation has res judicata effect, BSC argues that the stipulation nevertheless is not binding in the contract dispute between BSC and MFV because it was part of a settlement agreement between only MFV and St. Jude. BSC asserts that “while BSC (as a party to the litigation) signed the St. Jude stipulation ...
BSC agreed only to the fact that St. Jude entered into a stipulation.” Having “not itself enter[ed] into or approve[d] the 202 stipulation,” BSC should have been allowed to raise St. Jude’s invalidity defenses in its defense against MFV. BSC’s argument fails because BSC was, in fact, a party to the stipulation of the validity stipulation for the T19 patent for the purposes of preclusive effect. The language of the stipulation points us to that understanding. The stipulation states: The Mirowski plaintiff and the defendants [St. Jude], having entered into a confidential settlement of their dispute following a good-faith mediation,
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