Synthes, Inc. v. Knapp

250 F. Supp. 3d 644, 2017 WL 1398827, 2017 U.S. Dist. LEXIS 59951
CourtDistrict Court, E.D. California
DecidedApril 19, 2017
DocketNo. 2:13-cv-02261-MCE-DB
StatusPublished

This text of 250 F. Supp. 3d 644 (Synthes, Inc. v. Knapp) is published on Counsel Stack Legal Research, covering District Court, E.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Synthes, Inc. v. Knapp, 250 F. Supp. 3d 644, 2017 WL 1398827, 2017 U.S. Dist. LEXIS 59951 (E.D. Cal. 2017).

Opinion

MEMORANDUM AND ORDER

MORRISON C. ENGLAND, JR., UNITED STATES DISTRICT JUDGE

Plaintiffs Synthes, Inc. and DePuy Synthes Sales, Inc. (“DSS”) bring this suit against one of its former employees, Defendant Gregory Knapp. They allege that Knapp violated his non-competition agreement, violated his non-disclosure agreement, misappropriated trade secrets, and breached his fiduciary duty to his employer. Before the Court is Defendant’s Motion for Summary Judgment (“MSJ”), ECF No. 77, in which he challenges both Plaintiffs’ standing to enforce the non-competition agreement and the non-competition agreement’s general' enforceability. He also contends that Plaintiffs have failed to put forth sufficient evidence for the other claims against him to proceed to trial. As explained below, Defendant’s MSJ is GRANTED IN PART and DENIED IN PART.1

BACKGROUND2

Knapp worked as a salesman for Synthes products since 1989, and began selling Synthes spine implants to surgeons in 1993. When Knapp was originally hired, he worked for the unincorporated Spine Division of Synthes, Inc. Some time prior to 1993, Synthes Spine Company was created as a corporate subsidiary of Synthes, Inc. In 1993, Synthes Spine Company became Knapp’s direct employer, and in 1994, he signed a non-disclosure agreement (“NDA”). In 2006, Synthes Spine Company required that Knapp sign a Confidentiality, Non-Solicitation, and Non-Competition Agreement (“NCA”). Knapp signed the NCA in consideration for a [648]*648compensation plan offered to certain Synthes sales consultants called the Long Term Sales Incentive Plan (“LTSIP”) as well as “a guarantee of 60 days advance notice of termination or severance pay in lieu of notice.” NO A, EOF No. 92-1, Ex. 8, at 3. Plaintiffs describe the LTSIP as a primary tool to prevent their sales consultants from being hired away by competitors.

In June 2012, Johnson & Johnson (“J & J”) acquired Synthes, Inc.’s stock in a reverse merger. The following year, Knapp began working for K2M, Inc., a competitor. Knapp transferred millions of dollars’ worth of clients from Synthes products to K2M products. Plaintiffs allege that in doing so, Knapp violated both his NDA and NCA, as well as misappropriated trade secrets and violated his duty of loyalty to his employer.

To a large degree, this case involves the effect of Synthes, Inc.’s merger with J & J, so a brief description of that transaction as it relates to Knapp’s employment is necessary. As described above, prior to J & J’s acquisition of Synthes, Knapp’s direct employer was Synthes Spine Company, a corporate subsidiary of Synthes, Inc. In 2008, Synthes Spine Company was converted into a Delaware limited liability company and changed its name to Synthes USA Sales LLC (“SUSA”). As part of the merger with J & J, SUSA was merged into J & J’s existing spine implants division, DePuy Spine, Inc, and its assets were distributed to the newly created DSS, a subsidiary of DePuy Spine, Inc. These transactions made DSS Knapp’s direct employer.

STANDARD

The Federal Rules of Civil Procedure provide for summary judgment when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). One of the principal purposes of Rule 56 .is to dispose of factually unsupported claims or defenses. Celotex, 477 U.S. at 325, 106 S.Ct. 2548.

Rule 56 also allows a court to grant summary judgment on part of a claim or defense, known as partial summary judgment. See Fed. R. Civ. P. 56(a) (“A party may move for summary judgment, identifying each claim or defense—or the part of each claim or defense—on which summary judgment is sought.”); Allstate Ins. Co. v. Madan, 889 F.Supp. 374, 378-79 (C.D. Cal. 1995). The standard that applies to a motion for partial summary judgment is the same as that which applies to a motion for summary judgment. See Fed. R. Civ. P. 56(a); State of Cal. ex rel. Cal. Dep’t of Toxic Substances Control v. Campbell, 138 F.3d 772, 780 (9th Cir. 1998) (applying summary judgment standard to motion for summary adjudication).

In a summary judgment motion, the moving party always bears the initial responsibility of informing the court of the basis for the motion and identifying the portions in the record “which it believes demonstrate the absence of a genuine issue of material fact.” Celotex, 477 U.S. at 323, 106 S.Ct. 2548. If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually does exist. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); First Nat’l Bank v. Cities Serv. Co., 391 U.S. 253, 288-89, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968).

In attempting to establish the existence or non-existence of a genuine factual dispute, the party must support its assertion by “citing to particular parts of materials in the record, including depositions, [649]*649documents, electronically stored information, affidavits^] or declarations ... or other materials; or showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Fed. R. Civ. P. 56(c)(1). The opposing party must demonstrate that the fact in contention is material, i.e., a fact that might affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Owens v. Local No. 169, Assoc. of W. Pulp & Paper Workers, 971 F.2d 347, 355 (9th Cir. 1992). The opposing party must also demonstrate that the dispute about a material fact “is ‘genuine, that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248, 106 S.Ct. 2505. In other words, the judge needs to answer the preliminary question before the evidence is left to the jury of “not whether there is literally no evidence, but whether there is any upon which a jury could properly proceed to find a verdict for the party producing it,' upon whom the onus of proof is imposed.” Anderson, 477 U.S. at 251, 106 S.Ct. 2505 (quoting Improvement Co. v. Munson, 81 U.S. 442, 448, 14 Wall. 442, 20 L.Ed. 867 (1871)).

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Bluebook (online)
250 F. Supp. 3d 644, 2017 WL 1398827, 2017 U.S. Dist. LEXIS 59951, Counsel Stack Legal Research, https://law.counselstack.com/opinion/synthes-inc-v-knapp-caed-2017.