MWG Enters., LLC v. ETS Wound Care, LLC

Citation586 F.Supp.3d 946
Decision Date18 February 2022
Docket NumberCause No. 4:19-cv-00424-SEP
Parties MWG ENTERPRISES, LLC, Plaintiff, v. ETS WOUND CARE, LLC, et al., Defendants.
CourtUnited States District Courts. 8th Circuit. United States District Court (Eastern District of Missouri)

586 F.Supp.3d 946

MWG ENTERPRISES, LLC, Plaintiff,
v.
ETS WOUND CARE, LLC, et al., Defendants.

Cause No. 4:19-cv-00424-SEP

United States District Court, E.D. Missouri, Eastern Division.

Signed February 18, 2022


586 F.Supp.3d 950

Edward L. Dowd, Jr., Elizabeth C. Carver, Michael Stacy Connelly, Philip Allen Cantwell, Dowd Bennett LLP, Clayton, MO, for Plaintiff.

Peter J. Dunne, Robert T. Plunkert, Brendan R. Burke, Pitzer Snodgrass PC, St. Louis, MO, for Defendant ETS Wound Care, LLC.

Peter J. Dunne, Robert T. Plunkert, Pitzer Snodgrass PC, St. Louis, MO, for Defendant Kimberly Day.

MEMORANDUM AND ORDER

SARAH E. PITLYK, UNITED STATES DISTRICT JUDGE

Before the Court are Defendants’ Motion for Summary Judgment on all Counts Raised by Plaintiff and Counts I and III of Defendants’ Amended Counterclaims, Doc. [63], and Plaintiff's Motion for Leave to File a Sur Reply, Doc. [82]. For the reasons set forth below, the Motion for Summary Judgment is granted in part and the Motion for Leave to File a Sur Reply is denied.

FACTUAL BACKGROUND 1

This lawsuit arises out of a contract between Plaintiff MWG Enterprises, LLC, d/ b/ a Atlas Health Services, LLC, and Defendants ETS Wound Care, LLC, and Kimberly Day2 relating to Mirragen, a medical device made of bioabsorbable borate-based

586 F.Supp.3d 951

glass fibers and particles, which enable it to absorb fluid from wound sites and facilitate healing. Docs. [80] ¶ 1, [64] at 3. ETS designs and manufactures Mirragen. Doc. [64] at 3. MWG is a distributor. Id.

I. The Distribution Agreement

In 2017, ETS and MWG established a Mirragen distributorship arrangement. On June 12, 2017, ETS and MWG executed a Non-Disclosure Agreement (NDA), Docs. [1] ¶ 9, [15] ¶ 9, and on July 1, 2017, the parties executed a Distribution Agreement (Agreement), effective on July 20, 2017, which gave MWG the exclusive right to sell Mirragen in six states and to the entire federal government. Docs. [80] ¶¶ 1, 3, [64-1] ¶ 1.1. In consideration of its exclusive dealing right, MWG agreed to make an "initial minimum purchase order" of Mirragen within five days of the Agreement's execution or a contractual "Kickoff meeting," whichever occurred later. Docs. [1] ¶ 18, [15] ¶ 18.3 MWG also promised to use "best efforts to promote, demonstrate, stimulate interest in, solicit orders for and sell" Mirragen in an "end-user environment." Doc. [64-1] ¶ 2.1. MWG promised to keep records, make disclosure to ETS regarding product distribution, and refrain from selling Mirragen to persons or entities that were "not hospitals or appropriate medical facilities." Id. ¶¶ 3.5, 8.7, 2.3. The Agreement also authorized either party to terminate the Agreement without providing an opportunity to cure before completion of its contractual term if the other party committed a material, incurable breach. Id. ¶ 8.4.

II. The July 13, 2018, Termination Letter

Toward the end of the Agreement's first one-year term, the relationship between ETS and MWG soured. On July 13, 2018, ETS sent MWG a letter purporting to terminate the Agreement on July 20, 2018. Docs. [80] ¶ 15, [64-5] at 1. The Termination Letter alleged several breaches of the terms of the Agreement. Specifically, it charged that:

(1) MWG had breached its obligation to use its "best efforts" when it was "unable to articulate the efforts made to solicit interest in the products in the territories" and represented only that it was "in ‘active communication’ with accounts but could not describe if such communications" merely solicited opportunities to demonstrate Mirragen. Doc. [64-5] at 2.

(2) MWG had failed to account for product sales, "support[ing] [ETS's] belief that significant product has been warehoused or provided to non-customers," in violation of the Agreement. Id. ETS also asserted that it believed MWG was illicitly selling Mirragen to sub-distributors. Id. (citing Doc. [64-1] ¶¶ 2.1, 2.11, 15.4).

(3) MWG had breached its duty of good faith and fair dealing by showing a "lack of diligence and slacking off and a willful rendering of imperfect performance," and by "warehous[ing]" Mirragen and entering into sales with "non-customers." Id. at 3 (citing Doc. [64-1] ¶ 2.1).

(4) Because MWG had warehoused product and sold it to non-customers, it had failed to satisfy the Sales Metrics for the territories. Id. (citing Doc. [64-1] ¶ 7.2).
586 F.Supp.3d 952

III. July 20, 2018, to Present Lawsuit

After the Termination Letter's effective date passed and attempts to renegotiate failed, Docs. [64] at 4, [64-4] at 295:11-15, ETS entered into contracts with alternative distributors to sell Mirragen in MWG's exclusive territories while MWG continued to sell Mirragen, Docs. [64] at 4-5, [64-6] ¶ 2. On March 8, 2019, MWG filed suit against ETS and brought the following claims:

Count I: Declaratory Judgment

Count II: Breach of Contract (Distribution Agreement)

Count III: Breach of Contract (NDA)

Count IV: Recoupment

Count V: Theft of Trade Secrets under Federal Law

Count VI: Theft of Trade Secrets under State Law

Count VII: Tortious Interference

Doc. [1] at 15-26. In Count I, MWG seeks a judicial declaration that the Agreement and NDA remained in full force and effect since execution. Id. ¶ 75. Count II asserts a breach of contract claim under the Agreement under the theories that ETS (i) wrongfully terminated the Agreement, (ii) illicitly granted other distributors the right to sell Mirragen in the exclusive territories, (iii) impermissibly used MWG's "customer list," and (iv) failed to act in good faith. Docs. [1] ¶¶ 79, 82-83, 85, [63] ¶ 1.b. In Counts III, V, and VI, MWG alleges that ETS breached the NDA and violated both state and federal trade secrets law by using both: (i) research produced by MWG and the U.S. Department of Defense (DOD), and (ii) MWG's "customer list." Docs. [1] ¶¶ 99-109, 123-42, 144-48, [63] ¶¶ 1.c, 1.e-f. In Count IV, MWG brings a recoupment claim to recover its financial investment in the Mirragen it purchased. Docs. [1] ¶ 115-121, [63] ¶ 1.d. And Count VII claims that ETS tortiously interfered in MWG's business relationships with its present and potential customers when ETS communicated to those customers that MWG was no longer an authorized Mirragen distributor. Docs. [1] ¶¶ 152-64, [63] ¶ 1.g.

ETS filed its Answer, Doc. [15], on April 9, 2019, as well as an Amended Counterclaim and Affirmative Defenses on August 7, 2019. Doc. [31]. In the Amended Counterclaim, ETS alleges the following:

Count I: Breach of Contract (Distribution Agreement)

Count II: Tortious Interference

Count III: Declaratory Relief

Count IV: Injunctive Relief

Docs. [31] at 7-25, [63] ¶ 2.a-d.

On March 12, 2021, ETS filed the instant Motion seeking summary judgment on the entire Complaint and Counterclaim Count III, as well as partial summary judgment on Counterclaim Count I. Doc. [63] ¶¶ 6-12. ETS argues that there is no genuine dispute of material fact that MWG incurably and materially breached the Distribution Agreement when it (i) failed to use "best efforts" to sell Mirragen, (ii) failed to maintain proper records and provide them to ETS, (iii) intentionally provided ETS with false sales information, and (iv) sold Mirragen to persons and entities that were "not hospitals or appropriate medical facilities." Id. ¶¶ 4, 5. Therefore, ETS claims that it is entitled to summary judgment on Counterclaim Count I and III, id. ¶ 6, as well as Complaint Count I, id. ¶ 4.

Because, in its view, the Agreement was validly terminated, ETS also claims judgment as a matter of law on MWG's other claims that depend upon the vitality of the Agreement after July 20, 2018. Specifically, ETS argues that it is entitled to summary judgment on Complaint Count II concerning ETS's allegedly wrongful engagement

586 F.Supp.3d 953

of alternative distributors in MWG's territory and the purported termination of the Agreement. Id. ¶¶ 6, 7. ETS also claims that Complaint Count VII for ETS's tortious interference with MWG's business relationships must fail as a matter of law, because MWG no longer had a right to distribute Mirragen. Id. ¶ 7.

Separately, ETS maintains that summary judgment is proper on Complaint Counts II, III, V, and VI for ETS's alleged use of MWG's "customer list" and DOD research because there is no evidence that ETS disclosed or misused the list and, even if it had, it obtained no economic benefit. Id. ¶ 9. ETS states that summary judgment on Complaint Count IV is appropriate because recoupment is not an affirmative cause of action under Missouri law in these circumstances. Id. ¶ 11. Finally, and independent of any cause of action, ETS claims it is entitled to judgment as a matter of law that any damages owed to MWG are contractually restricted to the price MWG paid for its purchased Mirragen. Id. ¶ 12.

LEGAL STANDARD

Under Federal Rule of Civil Procedure 56, either party may move for summary judgment. "The court shall grant summary judgment if 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). The movant "bears the initial responsibility of informing the district court of the basis for its motion" and must identify "those portions of [the record] ... which it believes demonstrates the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the movant meets this burden, "the burden shifts to the nonmovant to submit evidentiary materials that ‘designate specific facts showing that there is a genuine issue for trial.’ " Miner v. Schrieber, 2020 WL 3605619, at *1 (E.D. Mo. July 2, 2020) (quoting Celotex, 477 U.S. at 324, 106 S.Ct. 2548 ). An issue of fact is genuine when "a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "In ruling on a summary judgment motion, a court must view the facts in the light most favorable to the non-moving party." Leonetti's Frozen...

To continue reading

Request your trial
1 cases
  • Bowman v. Chambers
    • United States
    • United States District Courts. 8th Circuit. United States District Court (Eastern District of Missouri)
    • February 22, 2022
    ...duties and functions be governed by and comply with the court-adopted plan of apportionment.Exhibit ACourt Adopted Plan586 F.Supp.3d 945586 F.Supp.3d 946 Exhibit BCourt Adopted Plan Total White Population Black Population Perimeter Polygon District Population Number Percentage Number Percen......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT