Stryker Corp. v. Ridgeway, Case No. 1:13-CV-1066
| Decision Date | 10 September 2015 |
| Docket Number | Case No. 1:14-CV-889,Case No. 1:13-CV-1066 |
| Parties | STRYKER CORPORATION, a Michigan corporation; HOWMEDICA OSTEONICS CORP., a New Jersey corporation, Plaintiffs, v. CHRISTOPHER RIDGEWAY, an individual; RICHARD STEITZER, an individual; BIOMET, INC., an Indiana corporation, Defendants. and STONE SURGICAL, LLC, Plaintiff, v. STRYKER CORPORATION and HOWMEDICA OSTEONICS CORP., Defendants. |
| Court | U.S. District Court — Western District of Michigan |
HON. ROBERT HOLMES BELL
These consolidated cases are before the Court on Stryker's motion to dismiss Christopher Ridgeway's counterclaim in 1:13-CV-1066 (ECF No. 82) and on Stryker's motion to dismiss Stone Surgical LLC's Amended Complaint in 1:14-CV-889 (ECF No. 46).For the reasons that follow, Stryker's motions will be granted in part and denied in part.
Ridgeway was a sales representative and later a district sales manager for Stryker's subsidiary Howmedica in Louisiana from 2001 until his termination on September 10, 2013. (Ridgeway Countercl. ¶¶ 4, 6, 7, 21, ECF No. 76.)
Ridgeway alleges supervisors and managers in Stryker's Human Resources Department admitted to him on numerous occasions that they did not have a legal, binding, or enforceable non-compete agreement with him. (Id. at ¶¶ 25-26.) Ridgeway alleges that on several occasions Stryker asked him to sign a non-compete agreement, but he always declined. (Id. at ¶ 27.) He alleges that in 2012, he refused Stryker's offer of $15,000 in stock options because it was conditioned on his signing a non-compete agreement. (Id. at ¶¶ 28-29.)
Biomet Microfixation, LLC is Stryker's competitor in the field of spinal and skull implants. (Id. at ¶ 5.) While Ridgeway was employed by Stryker, Biomet approached Ridgeway to enter into a distributorship agreement for the sale and distribution of spinal and skull implants. (Id. at ¶ 3.) Upon learning that Ridgeway had entered into serious discussions with Biomet, Stryker terminated Ridgeway's employment. (Id. at ¶ 7.) Thereafter, Ridgeway, through his limited liability company, Stone Surgical LLC, negotiated distributorship agreements with Biomet to sell and distribute Biomet spinal and skull implants in Louisiana. (Id. at ¶ 8.)
Stryker filed this action against Ridgeway and Biomet, alleging breach of contract (a non-compete agreement), breach of fiduciary duty, misappropriation of trade secrets, and tortious interference with contract. Stryker attached an employee non-compete agreement to the complaint which it alleged was a "true and correct copy of Ridgeway's Agreement." & .) After receiving the complaint with the alleged non-compete agreement, Biomet terminated its distributorship agreement with Stone Surgical because it believed that the non-compete agreement was genuine. (Ridgeway Countercl. ¶¶ 48, 49.)
Stryker subsequently acknowledged that it does not have Ridgeway's original non-compete agreement. On October 21, 2013, Stryker filed an amended complaint in which it alleged that it sent Ridgeway a form Employee Non-Compete Agreement in 2001; that Ridgeway executed the form agreement; and that Ridgeway faxed back to Stryker only the execution page of the form agreement. ( & .)
Ridgeway filed a counterclaim against Stryker, alleging the following claims:
(No. 1:13-CV-1066, ECF No. 76.)
Stone Surgical filed an eight-count complaint against Stryker in the United States District Court for the Eastern District of Louisiana to recover commissions it would have made in the future as a distributor for Biomet. Stone Surgical's amended complaint alleges the following claims:
(No. 1:14-CV-889, SS Am. Compl., ECF No. 44.)
Ridgeway's counterclaim and Stone Surgical's amended complaint are both premised on the contention that Stryker fabricated a non-compete agreement between Ridgeway and Stryker and then used that non-compete agreement to interfere with the contract between Stone Surgical and Biomet. Stone Surgical's complaint was transferred to this Court and the two cases have been consolidated.
Stryker has moved to dismiss Ridgeway's counterclaim and Stone Surgical's amended complaint in their entirety pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim on which relief can be granted.
Rule12(b)(6) permits a court to dismiss a complaint if it fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). In reviewing a Rule 12(b)(6) motion,this court construes the complaint in the light most favorable to the plaintiff, accepts the plaintiff's factual allegations as true, and determines whether the complaint contains sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Heinrich v. Waiting Angels Adoption Servs., Inc., 668 F.3d 393, 403 (6th Cir. 2012). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. 678. "A claim is plausible on its face if the 'plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'" Ctr. for Bio-Ethical Reform, Inc. v. Napolitano, 648 F.3d 365, 369 (6th Cir. 2011), cert. denied, 132 S. Ct. 1583 ( 2012) (quoting Iqbal, 556 U.S. at 677). Dismissal may be granted only if the moving party is "clearly entitled to judgment." Poplar Creek Dev. Co. v. Chesapeake Appalachia, L.L.C., 636 F.3d 235, 240 (6th Cir. 2011).
Ridgeway and Stone Surgical have alleged claims under both Michigan and Louisiana law. Stryker contends as a preliminary matter that all of the claims asserted under Louisiana law are subject to dismissal because Michigan law governs the tort claims alleged in Ridgeway's counterclaim and Stone Surgical's complaint. Ridgeway and Stone Surgical disagree.
A federal court sitting in diversity applies the substantive law of the state in which it sits, including the state's choice-of-law rules. Equitable Life Assur. Soc. of United States v. Poe, 143 F.3d 1013, 1016 (6th Cir. 1998) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 79 (1938)); see also Klaxon Co. v. Stentor Elec. Mfg. Co., Inc., 313 U.S. 487, 496 (1941) (). However, when a case is transferred from one federal court to another pursuant to 28 U.S.C. § 1404(a), the transferee court applies the choice-of-law rules that the transferor court would have applied. Ferens v. John Deere Co., 494 U.S. 516, 522-23 (1990); Volvo Const. Equip. N. Am., Inc. v. CLM Equip. Co., Inc., 386 F.3d 581, 599-600 (4th Cir. 2004) (citing Van Dusen v. Barrack, 376 U.S. 612, 632-37 (1964)). This rule, however, is subject to the caveat that, if the transfer was made not for the convenience of the parties and witnesses but pursuant to the first-to-file rule, then no deference to the transferor court is required. Id.
The Stone Surgical complaint was transferred to this Court under the first-to-file rule. (Aug. 19, 2014 Op. at 7, Case No. 1:14-CV-889, ECF No. 35.) Accordingly, this Court is not required to defer to Louisiana's choice-of-law rules. The Court will ultimately determine the governing law for both Ridgeway's counterclaim and Stone Surgical's complaint under the Michigan choice-of-law rules.
"In a tort action, Michigan courts recognize a presumption in favor of lex fori and apply Michigan law 'unless a "rational reason" to do otherwise exists.'" Standard Fire Ins. Co. v. Ford Motor Co., 723 F.3d 690, 693 (6th Cir. 2013) (quoting Sutherland v. KenningtonTruck Serv., Ltd., 562 N.W.2d 466, 471 (Mich. 1997)). In determining whether to displace Michigan law, Michigan courts undertake a two-step analysis:
First, we must determine if any foreign state has an interest in having its law applied. If no state has such an interest, the presumption that Michigan law will apply cannot be overcome. If a foreign state does have an interest in having its law applied, we must then determine if Michigan's interests mandate that Michigan law be applied, despite the foreign interests.
Id. (citing Olmstead v. Anderson, 400 N.W.2d 292, 304-05 (Mich. 1987)). Michigan courts consider the place where the injury occurred as the place of the wrong, and they treat the place of the injury as a significant factor in determining what law to apply. Standard Fire, 723 F.3d at 698. If there is no conflict between the laws of the states, the presumption that the law of the forum state controls is not overcome. Rosen v. Chrysler Corp., 205 F.3d 918, 921 n. 2 (6th Cir. 2000).
The non-compete agreement at issue in this case contains a Michigan choice of law provision:
This Agreement shall be construed in accordance with and governed for all purposes by the law of the State of Michigan.
(Non-Compete Agrmt., SS Am. Compl. Ex. B, ¶ 13.) However, the fact that this Court previously denied Ridgeway's motion to dismiss for lack of personal jurisdiction based on Stryker's prima facie showing that Ridgeway signed the...
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