DePuy Synthes Sales, Inc. v. Globus Medical, Inc.

259 F. Supp. 3d 225
CourtDistrict Court, E.D. Pennsylvania
DecidedApril 26, 2017
DocketCIVIL ACTION NO. 17-1068
StatusPublished
Cited by29 cases

This text of 259 F. Supp. 3d 225 (DePuy Synthes Sales, Inc. v. Globus Medical, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
DePuy Synthes Sales, Inc. v. Globus Medical, Inc., 259 F. Supp. 3d 225 (E.D. Pa. 2017).

Opinion

[229]*229MEMORANDUM

O’NEILL, District Judge.

Plaintiff DePuy Synthes Sales, Inc. initiated the present action seeking injunctive relief and monetary damages against defendants Globus Medical, Inc., Michael Foley, Jeremy Leary and Michael Valeri in connection with Globus Medical’s alleged poaching of DePuy Synthes’ employees, customer relationships and goodwill. Following plaintiffs motion for preliminary injunction, defendants moved to dismiss the entire complaint. For the following reasons, I will grant defendants’ motion to dismiss in part and deny it in part.

FACTUAL BACKGROUND

I. DePuy Synthes’ Business Generally

According to the facts set forth in the complaint, plaintiff DePuy Synthes is a leader in the highly competitive medical device industry. Compl. ¶ 21. DePuy Synthes designs, manufactures, markets and sells medical implants and instrumentation such as plates, screws, rods and other devices used, in orthopedic surgeries for internal fixation of broken bones and for spinal and facial surgery. Id. ¶ 21. It then markets and sells its products through a sales force primarily comprised of sales consultants who are assigned to specific territories and, in many instances, work with and under regional team leaders. Id. ¶ 23. DePuy Synthes generally pays its sales consultants on a commission basis and provides incentives and enhanced commissions to promote growth within the consultants’ assigned territories. Id. ¶ 24. In addition to selling products, sales consultants are expected to assist surgeons in the operating room when De-Puy Synthes products are used and, as a result, sales consultants’ relationships with their physician customers are key factors necessary to grow and maintain the business. Id. ¶ 25. DePuy Synthes’ customers include group purchasing organizations and integrated delivery networks; health systems; hospitals and .surgery centers and their materials management, operating room, sterile processing, purchasing and relating personnel; and physicians and their partners, employees and staff nurses. Id. ¶ 26.

DePuy Synthes invests significant time, effort and money to develop its confidential information, training programs, customer relationships and related goodwill. Id. ¶ 27. To protect these investments, it requires all sales employées to sign an employee agreement, which contains obligations that protect against the use or disclosure of confidential information, the solicitation and servicing of its customers, the solicitation of its employees to leave their employment, disloyalty during employment and the efficient transition of responsibilities in the event of a termination. Id. ¶ 27.

II. Globus Medical’s History of Competition With DePuy Synthes

Globus Medical, Inc. is a direct'competitor of DePuy Synthes. Id. ¶ 28. Its founding became the subject of a three-year federal action involving allegations that Globus Medical and two of its top executives, who were former DePuy Synthes employees, stole DePuy Synthes’ trade secrets and confidential information and breached their employee contracts. Id. ¶ 29. That litigation settled in August 2007. Id. ¶ 30.

According to the complaint, Globus Medical has continued “poaching” DePuy Synthes employees in violation of their employment agreements. Id. ¶ 30. This conduct became the subject of at least six state and federal lawsuits, which culminated in a global settlement of all claims bn September 23, 2010. Id. ¶ 31. Following DePuy Synthes’ merger with and into a subsidiary of the Johnson & Johnson fami[230]*230ly of companies on June 14, 2012, however, Globus Medical purportedly resumed poaching DePuy Synthes employees. Id. ¶ 32, The February 2017 recruitment and hiring of defendants Michael Foley, Jeremy Leary and Michael Valeri (collectively, “the Sales Consultants”) are among the most recent examples of Globus Medical’s alleged conduct. Id. ¶ 33.

III. The Sales Consultants

Defendant Michael Foley was a sales consultant in the spine division of DePuy Synthes’ business, and was assigned the Central Jersey territory encompassing customers such as John F. Kennedy Medical Center, Robert Wood Johnson University Hospital, University Surgery Center and Saint Peter’s University Hospital, as well as the physicians and staff affiliated with those locations. Id. ¶ 34. On November 14, 2014, DePuy Synthes hired Foley as a sales consultant from his previous employment with Spinal Concepts (a contracted DePuy Synthes distribution company), at which time Foley executed his DePuy Synthes employment agreement. Id. ¶ 35.

Defendant Jeremy Leary was a sales consultant in the spine division of DePuy Synthes’ business, and was assigned the Jersey Coast territory encompassing customers such as Bayshore Community Hospital, Jersey Shore University Medical Center, Monmouth Medical Center, Ocean Medical Center, Riverview Medical Center, Southern Ocean Medical Center and Surgicare Surgical Associates of Freehold, as well as the physicians and staff affiliated with those locations. Id. ¶ 36. On November 14, 2014, DePuy Synthes hired Leary as a sales consultant from his previous employment with Spinal Concepts, at which time Leary executed his DePuy Synthes employment agreement. Id. ¶ 37.

Defendant Michael Valeri served as the team leader for the Central Jersey and Jersey Coast territories working in collaboration with Foley and Leary and having shared responsibility for the customers in those territories. Id. ¶ 38. On November 14, 2014, DePuy Synthes hired Valeri as a sales consultant from his previous employment with Spinal Concepts, at which time Valeri executed his DePuy Synthes employment agreement. Id. ¶ 39.

The Sales Consultants worked collaboratively l'egarding business in the team’s territories, business planning and strategy, customer engagement and competitive threats and responses. Id. ¶ 40. To fulfill their responsibilities, they had access to confidential information related to the business in their territories and beyond, including periodic and year-end sales data, performance rankings, sales by pathology and product line and customer or GPO-specific pricing and discounts, as well as information related to DePuy Synthes’ research and development plans and strategy and sensitive discussions between De-Puy Synthes and its customers related to the development and rollout of new products and the refinement of existing products. Id. ¶ 41. The complaint alleges, upon information and belief, that some of this confidential information may have been transmitted to the Sales Consultants’ personal email accounts. Id.

In connection with DePuy Synthes’ transition to a direct-sales model and the termination of its distribution relationship with Spinal Concepts, and to protect the customer relationships and goodwill belonging to DePuy Synthes, Spinal Concepts assigned all rights it had in any agreements with Foley, Leary and Valeri, including any rights in non-competition and non-solicitation obligations owed to Spinal Concepts, and confirmed the assignment of all rights and intangibles, including goodwill associated with customers, to DePuy Synthes. Id. ¶ 42.

[231]*231The Sales Consultants' received specialized training on the technical aspects of DePuy Synthes’ products and the medical procedures in which these products are used, techniques for educating operating room personnel and surgeons during medical procedures and the use of new and existing implants and instrumentation. Id. ¶ 43.

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259 F. Supp. 3d 225, Counsel Stack Legal Research, https://law.counselstack.com/opinion/depuy-synthes-sales-inc-v-globus-medical-inc-paed-2017.