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Howmedica Osteonics Corp. v. Nuvasive, Inc.

United States District Court, D. New Jersey

November 15, 2018

HOWMEDICA OSTEONICS CORP., Plaintiff,
v.
NUVASIVE, INC., JOE VAN COTT, ERIC TRAMA, THOMAS CASAL, PETER NUNEZ, MICHAEL SCHEINER, CLINTON HANDELSON, MICHAEL BRENNAN Defendants.

          OPINION

          Kevin McNulty United States District Judge.

         The plaintiff, Howmedica Osteonics Corp., acting through its Stryker Spine division ("Stryker Spine"), brings suit against Joe Van Cott, Eric Trama, Thomas Casal, Peter Nunez, Michael Scheiner, and Clinton Handelson (collectively, "Individual Defendants"), as well as NuVasive, Inc. ("NuVasive"). (DE 34).

         Before the Court is the motion (DE 35) of the defendants under Fed.R.Civ.P. 12(b)(6) to dismiss several counts of the Amended Complaint for failure to state a claim upon which relief may be granted. For the reasons set forth in this opinion, the defendants' motion is denied.

         I. Summary[1]

         a. Background

         I write for the parties and therefore state only the facts relevant to this motion to dismiss.

         i. Stryker Spine's business

         Plaintiff Howmedica Osteonics Corp., acting through its Stryker Spine division, is a wholly owned subsidiary of Stryker Corporation. (AC ¶ 11). (Unless otherwise specified, "Stryker Spine" as used herein refers to Howmedica.) Stryker Spine invents, designs, manufactures, and sells spine-related instruments and implants. (AC ¶ 24).

         Stryker Spine directly employs sales representatives, who are assigned territories. (AC ¶ 28). Sales representatives are primarily responsible for building and developing relationships with surgeons in their territories. (AC ¶ 31). These sales representatives are organized into individual branches, which are overseen by sales managers. (AC ¶ 28). Sales managers are responsible for supervising and driving sales for their particular branch, managing the budget of their branch, and overseeing inventory. (AC ¶ 30). Sales managers are also expected to build and maintain customer relationships. (Id.).

         Aside from its own sales force, Stryker Spine sells its products through distributors, who are not Stryker employees. (AC ¶ 29). Distributors are given exclusive rights to sell Stryker Spine products in a given territory. (AC ¶ 29). Distributors hire their own sales representatives and sales managers. (Id.).

         Stryker Spine gives its sales representatives, and the sales representatives of its distributors, access to confidential and proprietary information. (AC ¶ 37). Sales managers, too, necessarily have access to Stryker Spine's confidential and proprietary information. That confidential information includes Stryker Spine's product designs and plans for the future (AC ¶ 38), as well as information about sales representatives' performance, business, and compensation. (AC ¶ 40).

         ii. Individual Defendants' employment with Fusion

         Until December 29, 2016, Fusions Solutions, Inc. ("Fusion") was the exclusive distributor of Stryker Spine products in the New York City and Long Island region. (AC ¶ 12). Each of the Individual Defendants, who at the relevant time were Fusion sales representatives, entered into an "Employment, Confidentiality, and Non-Compete Agreement" with Fusion (the "Fusion Agreement"). (AC ¶ 62, 64-69); (DE 34-2, 34-4 to 34-9).[2]

         Stryker Spine alleges that, because Fusion was an exclusive distributor of Stryker Spine products, the Confidential Information[3] and customer relationships protected by the Fusion Agreements included Stryker Spine's own confidential information and customer relationships. (AC ¶ 72).

         Effective December 29, 2016, Fusion Solutions and Stryker Spine entered into a Termination and Transition Agreement. Pursuant to that agreement, Fusion Solutions ceased operating as the exclusive distributor of Stryker Spine in the NYC and Long Island regions and assigned its rights in each of the Fusion Agreements to Stryker Spine. (AC ¶ 74).[4]

         iii. Individual Defendants' employment with Stryker Spine

         Effective January 1, 2017, Stryker Spine hired the Individual Defendants, who had been employed by Fusion, as Stryker Spine's direct employees. (AC ¶ 75). Individual Defendant Van Cott and non-party Jonathan Isopo were both hired as sales managers. (AC ¶ 45, 50). Individual Defendants Casal and Trama were hired as sales representatives, reporting to Van Cott, (AC ¶ 46-47); Individual Defendants Nunez, Handelson, Scheiner, and Brennan were hired as sales representatives, reporting to Isopo, (AC ¶ 52, 53, 54, 55).

         When hired by Stryker Spine, each of the Individual Defendants entered into a "Stryker Corporation Confidentiality, Intellectual Property, Non-Competition and Non-Solicitation Agreement for U.S. Employees" (the "Stryker Agreements"). (AC ¶¶ 78, 80-85).[5]

         Section 8.11 of the Stryker Agreement, titled "Entire Agreement" states:

This document, including its three attachments . . . contains the entire agreement of the parties related to the matters addressed in this Agreement . . . This Agreement supersedes any and all prior agreements between the parties with respect to the matters addressed in this Agreement."

(DE 34-10 at § 8.11). Similarly, Section 8.12 of the Stryker Agreement, titled "Prior Agreements" states: "Except as may be stated herein, I agree and acknowledge that this Agreement supersedes prior agreements between me and Stryker with respect to the subject matter addressed in this Agreement." (DE 34-10 at § 8.12).

         Each of the Individual Defendants received an incentive sign-on bonus during their first pay period in 2017. (AC ¶ 93) They executed an offer letter agreement obligating them to refund their sign-on bonus if they terminated employment within twelve months. (AC ¶ 95).

         iv. Individual Defendant's employment with NuVasive

         The spinal implant industry is highly competitive. (AC ¶ 26). Defendant NuVasive is one of Stryker Spine's direct and largest competitors. (Id.).

         In Mid-August 2017, NuVasive's Vice President of Sales, Jim Hens, and a NuVasive sales representative met with Van Cott and Isopo to discuss bringing Stryker Spine's New York City and Long Island sales force to NuVasive. (AC ¶ 99-100). In conjunction with this meeting, ...


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