Synthes, Inc. v. Gregoris

• Decision Date: 09 January 2017
• Docket Number: CIVIL ACTION NO. 16–06255
• Citation: 228 F.Supp.3d 421
• Parties: SYNTHES, INC., et al., Plaintiffs, v. Daniel GREGORIS, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

228 F.Supp.3d 421

SYNTHES, INC., et al., Plaintiffs,

v.Daniel GREGORIS, Defendant.

CIVIL ACTION NO. 16–06255

United States District Court, E.D. Pennsylvania.

Signed January 9, 2017

Anthony B. Haller, Jared M. Debona, Daniel Stephen Morris, Leigh Ann Buziak, Blank Rome LLP, Philadelphia, PA, for Plaintiffs.

Lawrence H. Pockers, Erica Lee Fruiterman, Robyn Stoter, Duane, Morris LLP, Philadelphia, PA, for Defendant.

MEMORANDUM

PAPPERT, District Judge

DePuy Synthes Sales, Inc., DePuy Orthopaedics, Inc. and Synthes, Inc. (collectively "Synthes") sells medical implants and related products in a number of categories, including trauma. Globus, Inc., another medical device company, already competes with Synthes in the spine category. It is now entering the trauma market and will compete directly with Synthes in that area as well. Globus was founded in 2003 by two former high-ranking Synthes employees and the companies have been competitors in the marketplace and combatants in the courtroom ever since.

Daniel Gregoris was a long-time Synthes employee who for many years served as an area vice president, reporting directly to the company's eastern vice president of sales. He left Synthes on October 31, 2016 to become the national head of sales for Globus's new trauma division. In 2014, however, Gregoris signed an employment agreement with Synthes. Part of that agreement prohibits Gregoris from, among other things, disclosing or using confidential Synthes information to which he had access if that information could disadvantage Synthes or advantage any Synthes competitor. The prohibition applies for eighteen months to any position in any location.

Synthes seeks a preliminary injunction and to hold Gregoris to the terms of his 2014 contract. After thorough review of all the documentary evidence and careful consideration of the testimony throughout a three-day hearing, the Court grants Synthes's motion. Synthes has clearly shown an imminent risk that in his new position Gregoris will disclose or use confidential Synthes information which could disadvantage Synthes or advantage Globus. Synthes has accordingly met the heavy burden required to obtain the extraordinary remedy it seeks.

I.

A.

Synthes grew from an affiliation of surgeons in Switzerland called the "AO" that wished to improve care for trauma patients in 1958. (Pl.'s Ex. 106.) Synthes designs, manufactures, markets and sells medical implants and instruments across several broad categories including joint reconstruction, trauma, spine, sports medicine and power tools. (Hrg. Tr., at 14:14–15:25; 25:18–26:16 (Gregoris Test.), ECF No. 31 (hereinafter "Hrg. Tr. 1").) Synthes is the global market leader in orthopedic trauma products, which include implants and instruments used for surgical treatment of fractures, deformities and tumor diseases of long bones. (Pl.'s Ex. 1.) Synthes sells these products to a range of customers, key among them hospitals and surgeons. (Verified Compl. ¶¶ 23 & 24; Pl.'s Ex. 1.)

Synthes's sales force is composed primarily of an extensive network of sales consultants around the country. Each sales consultant is responsible for driving sales by engaging in "direct customer service to the customer at the front line." (Hrg. Tr. 1, at 17:8–9 (Gregoris Test.).) A sales consultant is responsible for a discrete territory—for example, a group of hospitals in a specific city. (Id. , at 17:1–9 (Gregoris Test.); Pl.'s Ex. 31A (sealed).) Sales consultants report directly to one of approximately 100 regional managers. (Id. at 17:2–4; Hrg. Tr., at 22:13–16 (Gonzalez Test.), ECF No. 33 (hereinafter "Hrg. Tr. 2").) Each regional manager reports to one of sixteen Area Vice Presidents ("AVPs"). (Pl.'s Ex. 31A (sealed); Hrg. Tr. 2, 12:4 (Gonzalez Test.).) The AVPs manage "areas" that range from a single state, such as New York, to a region of states, such as the northwest. (Pl.'s Ex. 31A (sealed).) AVPs report to one of two vice presidents of sales (one in the eastern region of the country and one in the west) who in turn report directly to the president of Synthes.

AVPs are responsible for "leading the overall management of sales strategies, activities, operations, and budgets associated with driving sales for the organization." (Pl.'s Ex. 9, at 1.) AVPs must accordingly engage, manage and develop regional managers and lead the overall implementation of sales strategies and operations; they are also expected to forge and maintain relationships with key opinion leaders within their assigned geographic area. (Id. )

While AVPs are responsible for defined areas, they do not work in a vacuum. (Hrg. Tr. 1, at 49:13–15 (Gregoris Test.).) Their duties necessarily entail executing Synthes's nationwide sales plans within their assigned regions. An AVP therefore cannot do his or her job without knowing these national strategies and initiatives. (Hrg. Tr. 2, at 133:15–18 (Carpenter Test.).) To that end, the AVPs work together on a regular basis. Along with the two vice presidents of sales, the AVPs make up the sales leadership team for Synthes. (Id. at 131:24–132:6.) The team has weekly telephone calls, in addition to ad hoc calls and in-person meetings, during which the group discusses Synthes's strategic initiatives and national sales information. (Id. at 132:23–133:2.) In addition to these meetings, the AVPs also work together to develop Synthes's annual business plan. See (id. at 168:1–4). Lastly, AVPs occasionally attend national pricing committee meetings on behalf of the vice presidents of sales. (Id. at 107:17–108:4 (Gregoris Test.); Pl.'s Ex. 39 (sealed).) At these meetings, the pricing committee makes exceptions to established Synthes pricing matrices. (Hrg. Tr. 1, at 107:17–108:4; 103:18–25; Pl's Ex. 37a (sealed).)

Consistent with their leadership positions and overall company responsibilities, AVPs have access to and receive an extensive amount of confidential information, including national sales strategies, nationwide pricing information, national sales numbers with analysis and commentary, forecasts, growth plans, market strengths and weaknesses, information about confidential products still in development and sales consultant rankings. (Pl's Ex. 33A (sealed); Hrg. Tr. 2, at 134:1–135:8 (Carpenter Test.); Verified Compl. ¶ 6.) Strategies for optimizing the sales force in addition to information about other confidential projects and initiatives within the company are also shared with the AVPs. (Hrg. Tr. 2, at 134:21–135:4 (Carpenter Test.).)

B.

Synthes hired Daniel Gregoris as a trauma sales consultant in August 1996. (Hrg. Tr. 1, at 41:9 (Gregoris Test.); Decl. of Daniel Gregoris, ("Gregoris Decl.") ¶ 3, ECF No. 12–1.) Over the next twenty years, Gregoris worked his way up through the company. In 2006 Synthes promoted Gregoris to regional manager. (Hrg. Tr. 1, at 42:13–16 (Gregoris Test.).) In 2008 Synthes promoted Gregoris again, this time to AVP of the northeast region, an area that included New York and New England.¹ (Verified Compl. ¶ 32; Hrg. Tr. 1, at 44:1–4 (Gregoris Test.).) Gregoris worked as AVP for the northeast until May of 2016, when Synthes made him its director of commercial integration. (Gregoris Decl. ¶ 55.) In that role, Gregoris was no longer responsible only for sales; instead, he helped to integrate a recently acquired company, Bio Medical Enterprises ("BME"), into Synthes. (Id. ¶ 13.)

Gregoris neither sought nor wanted the commercial integration position. Rather, his new job title was the product of an ultimatum given to him by his manager, Vice President of Sales Ken Carpenter, following a Synthes corporate reorganization. (Hrg. Tr. 1, at 217:9–218:18 (Gregoris Test.).) After the reorganization, there were only sixteen positions available for the then-nineteen AVPs. (Hrg. Tr. 2, at 12:3–4 (Gonzalez Test.).) Synthes did not select Gregoris for one of the available AVP positions. (Id. at 11:15–22.) It offered him the BME position instead, while asking him to continue as AVP of New York on an interim basis until the already-selected permanent hire, Bassel Rifai, could assume the role. (Hrg. Tr. 1, at 224: 22–226:15 (Gregoris Test.); Gregoris Decl. ¶ 57.) The choice for Gregoris was clear: take the BME position or face termination. (Gregoris Decl. ¶¶ 55 & 56.)

In September 2016 Synthes offered Gregoris the AVP of New York position on a permanent basis because of his success with the BME integration and Synthes's decision to place Rifai into a different position. (Hrg. Tr. 1, at 226:24–227:2 (Gregoris Test.); Verified Compl. ¶ 47.) Gregoris verbally accepted the position but did not sign a new employment agreement.

At least in part due to the changes in his duties and a purported concern for his future at Synthes, Gregoris began speaking with Globus about taking a position as vice president of sales for its trauma division. Until recently, Globus has largely focused on manufacturing musculoskeletal implants for spine surgery. (Decl. of David Demski, ("Demski Decl."), ¶ 3, ECF No. 12–2.) The company has developed a comprehensive portfolio of over 140 spine products and an international distribution network through which to sell them. (Pl.'s Ex. 4, at 4.)

Globus is now, however, "in the very early stages of ... entering the trauma market" and is developing a "comprehensive bag" of products for use in trauma surgeries. (Demski Decl. ¶¶ 3 & 4.) The company has "aspirations to one day become a significant player in the trauma market with the ability to compete with market leaders," including Synthes. (Id. ¶ 5.) Globus currently has two trauma products under FDA review and anticipates submitting seven more within the next year. (Hrg. Tr., at 13:9–18 (Demski Test.), ECF No. 35 (hereinafter "Hrg. Tr. 3").) Globus anticipates FDA approval on its first two products in the spring of 2017 with the remaining products to follow later in the year. (Id. at 13:13–18.; Demski Decl. ¶ 4.)

While Globus awaits regulatory approval of its initial trauma products, it intends to develop...