Orthofix, Inc. v. Hunter

55 F. Supp. 3d 1005, 2014 U.S. Dist. LEXIS 151378, 2014 WL 5422838
CourtDistrict Court, N.D. Ohio
DecidedOctober 24, 2014
DocketCase No. 3:13 CV 828
StatusPublished
Cited by1 cases

This text of 55 F. Supp. 3d 1005 (Orthofix, Inc. v. Hunter) is published on Counsel Stack Legal Research, covering District Court, N.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Orthofix, Inc. v. Hunter, 55 F. Supp. 3d 1005, 2014 U.S. Dist. LEXIS 151378, 2014 WL 5422838 (N.D. Ohio 2014).

Opinion

MEMORANDUM OPINION AND ORDER

JACK ZOUHARY, District Judge.

Introduction

This is one of several cases between the same competitors that involves the poaching of salespeople in the medical device industry. Eric Hunter was employed by Orthofix as a medical device salesman from 2000 until 2012, when he abruptly quit via a middle-of-the-night email and joined Orthofix’s competitor, DJO, that same morning. This stab in the back took place after Orthofix refused Hunter’s proposal to become an independent distributor with Bob Lemanski, another Orthofix salesman. The two secretly plotted their escape with the help of DJO, over the course of several months, taking with them sales information, including unexecuted orders for Orthofix products which were later filled by DJO. From there, things got messy.

This Court held a bench trial July 15-17, 2014 and heard final arguments on August 21, 2014, preceded'by a Preliminary Order (Doc. 99) and briefing (Docs. 103-04).

Findings of Fact

Hunter’s Employment with Orthofix

Hunter is a 46-year-old medical device salesman who is presently self-employed (ITr. 541). In early 2012, he joined with [1007]*1007Lemanski to form Hunter, Lemanski and Associates (ITr. 54-55). The firm is an independent distributor of DJO medical devices (ITr. 55), including DJO bone growth stimulators (ITr. 67).

Orthofix employed Hunter as a salesman from 2000 until November 2012. As an Orthofix salesman, Hunter primarily sold bone growth stimulators, devices typically worn outside the skin of patients who have fractured a bone or undergone spinal fusion surgery. The lightweight, battery operated devices emit weak electrical currents or ultrasonic waves to facilitate bone healing (see 2Tr. 71). Three main competitors control the bone growth stimulator field — Orthofix, DJO (also known as Don-Joy Orthopedics), and EBI (also known as Biomet). At the time he left Orthofix in 2012, Hunter’s direct supervisor was Chris Summers, a regional sales director based in Cincinnati (2Tr. 107).

Prior to joining Orthofix in 2000, Hunter had no experience selling medical devices to physicians and no experience with or knowledge of bone growth stimulators (ITr. 55). Hunter graduated from the University of Toledo with a bachelor’s degree in exercise science (2Tr. 70). He then sold disability diagnostic computer programs to healthcare facilities (ITr. 56).

When Hunter joined Orthofix, he signed, after consulting with an attorney, an employment agreement containing, among other provisions, non-compete and non-disclosure clauses (ITr. 58-59). The agreement specified that it would be governed by Texas law (Ex. 1, Art. 9).

Hunter began as a territory sales manager and later became a district sales manager (ITr. 71). He worked to make contacts with orthopedic doctors, podiatrists, and neurosurgeons in the Toledo area (2Tr. 71-72). He developed customers and learned about the practices of the doctors in his territory, inquiring about their schedules, prescribing habits, and preferred brand of bone growth stimulators. Initially, Hunter’s sales territory covered northwest Ohio and a portion of southeast Michigan (ITr. 70). His territory later expanded to include northern Indiana and part of metro Detroit (ITr. 71).

As a district sales manager, Hunter was responsible for overseeing and mentoring junior sales representatives. One of those junior sales representatives included Le-manski, a Detroit-based representative whose territory encompassed northern metro Detroit (ITr. 72,148). In 2009, as a result of a compliance violation by Hunter for selling competitor products with his wife, Orthofix demoted Hunter and took away his metro Detroit territory. Leman-ski took over most of the doctors in Detroit that Hunter had beeii servicing.

In April 2012, Hunter and Lemanski approached Summers about becoming independent distributors for Orthofix, rather than W-2 employees (2Tr. 63). As independent distributors, they would be able to sell non-Orthofix products and a wider array of products (2Tr. 249). They presented Summers with a document entitled “Business Plan for Metro Detroit and Northwest Ohio” (Ex. 28). Orthofix rejected their request (2Tr. 92; 2Tr. 250).

Hunter Quits Orthofix and Joins DJO

In June 2012, after Orthofix rejected their independent distribution proposal, Hunter and Lemanski began plotting an exit from Orthofix and joining DJO (ITr. 147-48; 2Tr. 100-01; Ex. 35; Ex. -70). Richard Spina, DJO’s then-area vice president of sales for the central United States, which included Detroit, contacted Hunter (ITr. 147-48). Hunter presented Leman-ski as his partner to Spina and the three discussed Hunter and Lemanski joining DJO (ITr. 148). During that summer, Hunter and Lemanski traded text mes[1008]*1008sages about jumping ship for DJO and how to do so without violating their non-compete clauses with Orthofix, including the following exchange (Ex. 70A, 7/1/12 msgs.):

HUNTER: Bob i just left 6pm Mass. While in church i had an idea. Its far out, maybe God put the idea in my head, ha, he’s prob too busy to be giving me business ideas, but what if we started to sell pain cream soon and then we hopefully get fired then we don’t have to worry about a non-compete, just a thought. We’d have to have our ducks in a row. I never wanted to get fired but maybe in 90 days I want both of [u]s to get canned? Fritz could help us if we wanted to know
LEMANSKI: That’s what I was thinking
Interest it’s not a far out idea
HUNTER: Dj might like it cause of the potential legal fees savings. I like my ringtone idea Im still laughin
LEMANSKI: Would we really get caught w/ the pain cream?
HUNTER: Not likely but we could ultimatum Chris [Summers] that we are ready t[o] do our distributorship like it or not and we could piss him off so he would go to Faucett then we act really cocky and disrespectful so they ultimatum us and say stop or your fired. I know how to really piss those jackasses off by being cocky and disrespectful. Ha!

In August 2012, Hunter faxed his Ortho-fix employment agreement to Spina (Ex. 37). Hunter and Lemanski also presented Spina with a business plan for the Detroit region dated August 8, 2012, proposing a distribution relationship with DJO for bone growth stimulators (Ex. 38). The “Executive Summary” of the business plan outlined Hunter and Lemanski’s proposed venture in hyperbolic yet vague terms:

The population of Metro Detroit is 6 million while Northwest Ohio is estimated at 1 million. Eric Hunter and Bob Lemanski have a combined 18 years of Orthofix sales experience. We have worked well together and have forged a friendship over the last 6 years. Together as a team we have created synergies, produced new ideas, and executed on those new ideas to produce significant revenue growth. We can produce even more revenue growth over the next two years in the aforementioned markets.
We believe we can accomplish our goals by becoming a distributor. In addition to having secretaries to complete our paperwork, we would hire several sales associates to focus solely on the promotion, and execution of our spine stimulation business. * * * We would have more feet on the street.

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Related

Orthofix, Inc. v. Eric Hunter
630 F. App'x 566 (Sixth Circuit, 2015)

Cite This Page — Counsel Stack

Bluebook (online)
55 F. Supp. 3d 1005, 2014 U.S. Dist. LEXIS 151378, 2014 WL 5422838, Counsel Stack Legal Research, https://law.counselstack.com/opinion/orthofix-inc-v-hunter-ohnd-2014.