Sales reps defeat injunction motion by former employer

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Where a manufacturer of spinal implants and hardware alleged its former sales representatives violated contractual non-compete and non-solicit obligations, but the manufacturer was unlikely to succeed on its breach of contract claim, and the balance of equities and public interest did not favor a preliminary injunction, the manufacturer’s motion for injunctive relief was denied.

Background

This case arises out of conflict between Globus Medical Inc. — a manufacturer of spinal implants and hardware — and several former Globus sales representatives, who worked with surgeons and hospitals to distribute Globus’s products. Globus generally alleges that the sales representatives violated contractual non-compete and non-solicit obligations when they left Globus and began selling products from a different spinal products company to the same surgeons and hospitals to which they, as a team, were previously assigned.

Globus filed its amended motion for preliminary injunction on Nov. 16, 2022. Beginning on April 24, 2023, the magistrate judge held a four-day evidentiary hearing on the motion. On the second day of the hearing, Globus informed the magistrate judge that it was proceeding with its preliminary injunction claim against a subset of the defendants only: Curt McLeod, Terry McLeod and Scott Brooks.

In its proposed findings of fact and conclusions of law, Globus conceded that its tortious interference and unjust enrichment claims need not be considered for the purposes of the motion for preliminary injunction. Thus, as it pertained to the motion for preliminary injunction, the magistrate judge considered only evidence on the breach-of-contract claim. It is undisputed that the Richmond defendants were bound by contract not to “directly or indirectly … solicit, call on, interfere with, or attempt to divert, entice away, sell to or market to” and surgeons or hospitals to with they were “assigned.”

Judge Leonard issued his Report and Recommendation, or R&R, on Aug. 15, 2023. As the magistrate judge explained, the outcome of Globus’s motion turns largely on construction of the word “assigned” — whether the Richmond defendants acted as a team that was collectively assigned to the same hospitals and surgeons, or whether they were assigned individually to those hospitals and surgeons.

He found that “while the Richmond Defendants may have acted as a team in certain respects, the evidence presented during the hearing demonstrates that Globus likely only has a protectable interest in the customer goodwill that was developed by the Richmond Defendants’ direct and personal contact with the surgeons and hospitals with whom the Richmond Defendants were individually assigned.” Thus he concluded that Globus was unlikely to succeed on the merits of its breach-of-contract claim.

Judge Leonard found that the irreparable harm factor favors Globus’s position but that the balance of the equities does not. Because Globus failed to establish that the Richmond defendants breached their contractual obligations, Judge Leonard found that public interest does not favor a preliminary injunction either. Judge Leonard recommended denying the motion. Neither Globus nor any of the defendants filed an objection to the R&R.

Analysis

This court has reviewed all the relevant submissions by the parties and carefully considered the R&R. Finding no clear error, the court adopts the R&R as its own order without qualification. The amended motion for preliminary injunction is denied.

On Aug. 15, 2023, Globus filed a letter noting that the Richmond defendants’ “noncompete and non-solicit obligations would have expired on August 3, 2023.” The letter requested that the magistrate judge recommend to this court that it toll the Richmond defendants’ non-compete and non-solicit obligations “for one year from the entry of the order.”

The court construes the letter as a motion requesting that, if the court were to issue a preliminary injunction, the period of such injunction would run for a year after issuance. Because the court declines to issue a preliminary injunction, it denies the letter motion as moot.

Report and Recommendation adopted. Plaintiff’s amended motion for preliminary injunction denied. Letter motion denied as moot.

Globus Medical Inc. v. Jamison, Case No. 2:22-cv-282, Aug. 30, 2023. EDVA at Norfolk (Walker). VLW 023-3-528. 7 pp.