Synthes USA Sales, LLC v. Harrison

83 A.3d 242, 37 I.E.R. Cas. (BNA) 801, 2013 Pa. Super. 324, 2013 WL 6820871, 2013 Pa. Super. LEXIS 4571
CourtSuperior Court of Pennsylvania
DecidedDecember 24, 2013
StatusPublished
Cited by34 cases

This text of 83 A.3d 242 (Synthes USA Sales, LLC v. Harrison) is published on Counsel Stack Legal Research, covering Superior Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Synthes USA Sales, LLC v. Harrison, 83 A.3d 242, 37 I.E.R. Cas. (BNA) 801, 2013 Pa. Super. 324, 2013 WL 6820871, 2013 Pa. Super. LEXIS 4571 (Pa. Ct. App. 2013).

Opinion

OPINION BY

FITZGERALD, J.:

Appellant, Synthes USA Sales, LLC (“Synthes”), headquartered in Pennsylvania, appeals from the order entered in the Chester County Court of Common Pleas granting in part and denying in part its motion for a preliminary injunction against Appellees, Globus Medical, Inc. (“Globus”), also headquartered in Pennsylvania, and Peter Harrison, a California resident. Synthes contends that the trial court erred by applying California law in contravention of a non-compete agreement that provides it “will be governed by Pennsylvania law applicable to contracts entered into and performed in Pennsylvania.” We agree with Synthes and therefore reverse the order below and remand for further proceedings.

We state the facts and procedural history as set forth by the trial court:

On November 2, 2012, Peter Harrison quit his employment as a sales consultant with [Appellant] and started working in that capacity for a competitor, [Globus]. Within a half hour of giving his notice, Harrison initiated an action for declaratory relief in the federal District Court for the Eastern District of California, where at all times material hereto he resided and worked. Synthes, based in Chester County, Pennsylvania, is a leader in the medical device industry. It designs, manufactures and sells various devices for use in orthopedic surgery for the internal fixation and repair of the skeleton. Globus ..., headquartered in nearby Audubon, Pennsylvania, competes in that market.
On November 15, 2012, Synthes filed a complaint in the Court of Common Pleas of Chester County, along with an expedited Petition for a Preliminary Injunction, in which it sought to enforce a written “Confidentiality, Non-Solicitation and Non-Competition Agreement” (“the 2007 Agreement”). On the following day, Synthes filed a Motion to Dismiss the federal California action, which dealt with an earlier agreement executed by the parties in 2005.
On November 19, 2012, Harrison amended his complaint in the California action so as to seek declaratory relief regarding the 2007 Agreement, and Synthes moved to dismiss that action asserting that the federal court should [246]*246abstain from hearing a declaratory judgment action when an action addressing the same issues of state law are pending in state court in a foreign jurisdiction.[1]
Harrison and Globus, as defendants in the [Pennsylvania action], filed preliminary objections to the complaint seeking to stay or dismiss on the grounds that the California action was a prior pending action for purposes of Pa.R.C.P. 1028(a)(6).
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The gist of [Synthes’s] claims is that Harrison breached the terms of the 2007 ... Agreement after he resigned his position and went to work for Globus. [Synthes] alleges that [Harrison] used confidential customer information to solicit Syntheses] customers in violation of that agreement.

Trial Ct. Op., 2/8/13, at 1-2 (citations omitted).

The 2007 Agreement provided, inter alia, that Harrison would not solicit Synthes’s customers for one year after his employment ended:

I agree that during my employment and for a period of twelve (12) months after my employment with Synthes terminates for any reason, voluntary or involuntary, I will not solicit, contact, or provide services to (or attempt to do any of the foregoing), directly or indirectly, for the purpose or effect of competing or interfering with any part of Synthes’ Business: (1) any Customer of Synthes within my assigned territory; (2) any Customer of Synthes that I contacted, solicited, received commissions on sales, to whom I provided coverage, or in any way supported or dealt with at any time during the last two years of my employment; (3) any prospective Customer of Synthes that I contacted or who received or requested a proposal or offer from me on behalf of Synthes at any time during the last two years of my employment; or (4) any Customer of Synthes for which I had any direct or indirect responsibility at any time during the last two years of my employment.

Ex. B. to Synthes’s Compl., 11/15/12, at 3.

The 2007 Agreement also contained a choice of law provision:

CHOICE OF LAW AND FORUM:
This agreement will be governed by Pennsylvania law applicable to contracts entered into and performed in Pennsylvania. I agree that this agreement can be enforced by any federal or state court of competent jurisdiction in the Commonwealth of Pennsylvania and hereby consent to the personal jurisdiction of these courts.

Id. at 5.

The trial court interpreted the provision as requiring the application of California law. Trial Ct. Op. at 4. The court, applying California law, granted in part and denied in part Synthes’s motion for a preliminary injunction on December 17, 2012. Id. at 5. On December 21, 2012, the court issued an amended order granting in part and denying in part Synthes’s petition for a preliminary injunction. Synthes timely appealed that same day and timely filed a [247]*247court-ordered Pa.R.A.P. 1925(b) statement.

Synthes raises the following issues:

Did the trial court err in finding that the parties did not select Pennsylvania law as the governing law of the contract, where the contract’s plain, unambiguous language states, in a clause titled, “Choice of Law and Forum,” that the non-solicitation agreement “will be governed by Pennsylvania law applicable to contracts entered into and performed in Pennsylvania ”?
Did the trial court err as a matter of Pennsylvania law by incorrectly and incompletely applying each of the separate and independent prongs of the three-prong test set forth in the Restatement (Second) Conflicts of Law Section 187(2)(b),[2] erroneously disregarding the parties’ choice of Pennsylvania law, by:
(a) Under the first prong of the Restatement Test, (i) failing to apply the correct legal principles to the threshold question of whether California has a materially greater interest than Pennsylvania in the determination of the particular issue; (ii) confusing the question of the materially greater interest under the first prong of the Restatement Test with the question under the second prong of whether application of Pennsylvania law would be contrary to California’s fundamental policies; and (iii) by answering the question of which state had a materially greater interest by erroneously relying solely on the fact that Harrison lives and works in California, applying in effect a per se rule to defeat the parties’ choice of law, and by disregarding the well-established case law under which, on the undisputed facts of this case, Pennsylvania’s interest in the determination of the particular issue far outweighed California’s interests;
(b) Under the second prong of the Restatement Test, failing to recognize that there was no fundamental conflict of policy sufficient to disregard the chosen law because this case involved the enforcement of a non-solicitation provision designed to protect against the disclosure of trade secret information, as opposed to a blanket non-compete provision, and California law [248]

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Bluebook (online)
83 A.3d 242, 37 I.E.R. Cas. (BNA) 801, 2013 Pa. Super. 324, 2013 WL 6820871, 2013 Pa. Super. LEXIS 4571, Counsel Stack Legal Research, https://law.counselstack.com/opinion/synthes-usa-sales-llc-v-harrison-pasuperct-2013.