Free Status Report - District Court of Arizona - Arizona

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Stephen D. Hoffman, #13875 LEWIS BRISBOIS BISGAARD & SMITH LLP Phoenix Plaza Tower II 2929 North Central Avenue, Suite 1700 Phoenix, Arizona 85012-2761 Telephone: (602) 385-1040 Facsimile: (602) 385-1051 Attorneys for Wong and World Nutrition

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA

MARLYN NUTRACEUTICALS, INC., an Arizona corporation, Plaintiff,

No. CIV 02-1876 PHX-HRH DEFENDANT WORLD NUTRITION'S STATUS REPORT TO THE COURT (Assigned to The Honorable H. Russell Holland)

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vs.
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WILLIAM WONG and JANE DOE WONG, husband and wife; PATRICK BUEHL and JANE DOE BUEHL, husband and wife; WORLD NUTRITION, INC., an Arizona corporation; ABC Corporations I-X; XYZ PARTNERSHIPS I-X; and JOHN DOES I-X and JANE DOES I-X, husbands and wives, respectively, Defendants,

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WORLD NUTRITION, INC., an Arizona corporation, Third Party Plaintiff/Counterclaimant/ Defendant, vs.

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MARLYN NUTRACEUTICALS, INC., an Arizona Corporation; and CRAIG KNOBLOCH, Counterdefendant/Plaintiff/Third Party Defendant.

Case 2:02-cv-01876-HRH 4810-9560-9858.1

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Defendant World Nutrition, Inc. ("World Nutrition"), hereby provide its Status Report to the Court pursuant to this Court's February 29, 2008 Order. World Nutrition is willing to submit to a bench trial, either based upon the state of the evidence currently before the Court as the Court suggested, or in a new trial on the retrial on damages. However, World Nutrition understands that Marlyn is not willing to submit to this procedure, so World Nutrition proposes the following for the re-trial on damages. World Nutrition proposes a re-trial in two stages. The first stage would be for determining compensatory damages. After those damages are determined, the second stage would be to determine punitive damages. As the Court is aware from the first trial, there were issues with the jury utilizing certain evidence for an improper purpose in determining damages (by way of example, and without limitation, World Nutrition's gross sales figures), and allowing evidence of the conduct of the parties to affect its determination of damages. By holding the trial in two stages, these issues should be avoided in the re-trial. Again, by way of example, there would be no need to present World Nutrition's gross sales figures in stage one of the trial, as the only issue to be determined are what damages Marlyn can prove were caused by Defendant's infringing conduct. In other words, the evidence to be presented by Marlyn would be that of sales by World Nutrition that were caused by infringing conduct, as opposed to simply identifying World Nutrition's gross sales. Further, the issue of jury outrage affecting the award should also be minimized, as the punitive damages portion of the case would not be presented until stage two. Defendant also has considered the Court's suggestion to designate portions of the transcript and exhibits from the first trial for submission to a new jury. World Nutrition is generally not opposed to this suggested method, with certain caveats. First, World

Nutrition believes this should be done in two stages as outlined above. Second, World Nutrition is concerned that this approach will present a false reality to the new jury. Part

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of Marlyn's case is that it is the exclusive distributor of Wobenzyme®N in the United States. We now know that Marlyn is no longer a distributor of Wobenzyme®N and in fact is under a federal injunction (preliminary) prohibiting Marlyn from selling

Wobenzyme®N, from using the Wobenzyme®N name in any fashion, including on its website, and requiring Marlyn to recall all Wobenzyme®N product and issue refunds to people who purchased the product.1 Thus, Marlyn's claim that it should be entitled to all of World Nutrition's profits rings hollow since Marlyn does not even posses the right to sell the product that it alleges World Nutrition infringed upon. Additionally, Marlyn now acknowledges that 1) Mucos Pharma has shipped, since at least 2002, Wobenzyme®N, with a product composition dramatically different than represented on the product label, and 2) the claim that Wobenzyme®N is supported by "over 160 clinical studies" (as Marlyn alleged in the first trial) is a false statement and did not apply to the Wobenzyme®N shipped to, and sold by, Marlyn.2 Marlyn also

acknowledges that the amounts of Papain, trypsin and chymotrypsin in Wobenzyme®N deviated from the amounts listed on the product labels. As the Court may recall, much of Mr. Lehmann's testimony at trial were his statements that Mucos Pharma could not possibly change the manufacturing and formulation of the Wobenzyme®N product.3 Similarly, Marlyn now acknowledges that its prior testimony and evidence regarding Wobenzyme®N's registration in Europe with the BfArM (the German equivalent
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See, November 13, 2007 Order of the Honorable Roslyn O. Silver, United States District Judge, Clerk's Docket Number 129, in matter 2:07-CV-00012-PHX-ROS, United States District Court, District of Arizona. A courtesy copy of that Order is being provided with the copy of this motion to the Honorable H. Russell Holland. Pursuant to Local Rule of Civil Procedure 7.1(d)(4).
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See, Marlyn's Motion for Leave to File a Second Amended Complaint in matter 2:07-CV-00012PHX-ROS, Clerk's Docket 199, page 2, lines 19-27. See also, Clerk's Docket 199-2, page 64. A courtesy copy of that Motion is being provided with the copy of this motion to the Honorable H.

Russell Holland pursuant to LRCiv 7.1(d)(4).
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See, Marlyn's Motion for Leave to File a Second Amended Complaint in matter 2:07-CV-00012PHX-ROS, Clerk's Docket 199, page 3. A courtesy copy of that Motion is being provided with the copy of this motion to the Honorable H. Russell Holland pursuant to LRCiv 7.1(d)(4).

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of the FDA) is inaccurate, as were the statements about Wobenzyme®N standards under the International Pharmaceutical Federation. Mucos Pharma appears to have lost its

certification due to its inability to confirm the clinical efficacy of Wobenzyme®N and the enzymatic activity.4 There are other pertinent inconsistencies in Marlyn's testimony and evidence at trial and the actual state of affairs based upon Marlyn's position in the lawsuit between Marlyn and Mucos Pharma. Defendant is not attempting to re-litigate the prior issues, and has only brought a handful of the inconsistencies to the Court's attention at this time. However, as the Court can see, the risk of presenting the jury with a false reality is a valid concern. Defendant would suggest that if the Court is inclined to proceed in that manner, that the parties be provided an opportunity to object to certain evidence or testimony at the retrial. In addition to the inconsistent positions, there is also the issue of attempting to introduce evidence that may have been relevant at the first trial when liability was also an issue, but which evidence may be entirely irrelevant to a retrial on damages. (e.g. World Nutrition's gross sales figures.) In light of the discovery and evidentiary issues, Defendants would also request that the Court set a deadline and briefing schedule for the filing of motions in limine with respect to the new trial. Defendants would also request that the Court schedule oral argument on those motions in advance of the new trial date.
DATED this 21st day of March, 2008. LEWIS BRISBOIS BISGAARD & SMITH, LLP

By:________s/ Stephen Hoffman_________________ Stephen D. Hoffman Attorneys for Wong and World Nutrition

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See, Marlyn's Motion for Leave to File a Second Amended Complaint in matter 2:07-CV-00012PHX-ROS, Clerk's Docket 199-2, pages 11-12. A courtesy copy of that Motion is being provided with the copy of this motion to the Honorable H. Russell Holland pursuant to LRCiv 7.1(d)(4).

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CERTIFICATE OF SERVICE
I hereby certify that on the 21st day of March, 2008, a copy of the foregoing DEFENDANT WORLD NUTRITION'S STATUS REPORT TO THE COURT was filed electronically. A Notice of Electronic Filing (NEF) will be sent by operation of the Court's Electronic Case Filing (ECF) system to the filing party, the assigned Judge and any registered user in the case as indicated on the NEF. All other parties will be served by regular U.S. mail. Parties may access this filing through the Court's system.

____S/Stephen D. Hoffman________________ Stephen D. Hoffman LEWIS BRISBOIS BISGAARD & SMITH LLP Phoenix Plaza Tower II 2929 North Central Avenue, Suite 1700 Phoenix, Arizona 85012-2761 Telephone: (602) 385-1040 Facsimile: (602) 385-1051

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