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Rockwell Medical, Inc. v. Yocum

United States District Court, E.D. Michigan, Southern Division

December 30, 2014

RICHARD YOCUM, M.D., Defendant

Page 637

For Rockwell Medical, Inc., also known as Rockwell Medical Technologies, Inc., Robert Chioini, Plaintiffs: Scott E. Combs, LEAD ATTORNEY, Novi, MI.

For Richard Yocum, M.D., Defendant: Kathleen L. Bogas, Law Offices of Kathleen L. Bogas, PLLC, Bingham Farms, MI; Mami Kato, Sachs Waldman, P.C., Detroit, MI; John R. Runyan, Jr., Sachs Waldman, Detroit, MI.

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Honorable DAVID M. LAWSON, United States District Judge.

Before the Court is the motion by defendant Richard Yocum for a summary judgment of dismissal on the remaining counts of the complaint. Yocum was hired as plaintiff Rockwell Medical Technologies, Inc.'s vice president of drug development, but was fired two-and-a-half years later, in September 2011. Yocum sued Rockwell in California for wrongful termination, but his lawsuit was dismissed. Rockwell then brought the present case against Yocum, alleging that Yocum defamed Rockwell and violated various non-disclosure provisions of his employment agreement by statements made before and as a part of the California lawsuit. Rockwell also contends that Yocum misappropriated its tangible and intellectual property. After reviewing the initial motion papers, hearing the parties' oral argument on September 25, 2014, and considering the supplemental briefs, the Court concludes that the plaintiffs have not identified sufficient evidence in the record to create a triable fact question on any of its contract or business tort claims. Therefore, the Court will grant the defendant's motion for summary judgment and dismiss the complaint.


Rockwell is a pharmaceutical company. It hired Yocum as its vice president of drug development on February 23, 2009. Yocum was responsible for consulting about clinical testing on various drugs and communicating with doctors to market the company's drugs and to monitor clinical

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trials. Yocum signed an Employee Confidential Information Non-Compete and Invention Agreement, under which he agreed not to disclose any confidential or proprietary information.

Rockwell alleges that its relationship with Yocum began to deteriorate in 2010 because Yocum withheld important information from Rockwell regarding drug trials; spent all or most of his working hours conducting personal business and seeking other employment; disclosed confidential information about clinical trials to third parties; and spread false rumors that drugs under testing had not performed as expected or were in jeopardy of not receiving FDA approval. As a result, Rockwell alleges that it lost $50 million in market capitalization, based on the decline in the market price of its stock. Rockwell fired Yocum on September 17, 2011.

A. Employee Non-Disclosure Agreement

The parties do not dispute that when he began his employment with Rockwell, Yocum entered into a confidentiality and non-compete agreement with the company. Neither party has made any representation as to whether this confidentiality agreement constituted the entire contract between the parties meant to govern the defendant's employment, but it is the only document evidencing a contract between them that has been made a part of the record. The confidentiality agreement contains the following provisions that are relevant to the plaintiffs' claims:

Through my employment with the Company, I understand that I may be exposed to and entrusted with great amounts of confidential information concerning, among other things, the Company's (a) customer lists, clients, contacts, and prospects; (b) personnel resources and training techniques; (c) business, management, pricing, advertising and financial structures; and (d) other data pertaining to the Company's operations. Such information is highly confidential and represents the property and trade secrets of the Company.
. . .
I hereby warrant that during the period of my employment with the Company, or at any time thereafter, I will not divulge to any other person, firm, or corporation, either directly or indirectly, whether obtained before, during, or after my employment with the Company, the following:
A. The names and/or addresses of the Company's customers, clients, suppliers, business contacts and prospects;
B. The names and/or addresses of the Company's employees, agents, or personnel resources;
C The method of marketing employed or later developed by the Company in promoting its services;
D. The Company's pricing system and how the Company determines the price of its services and/or wages of its employees, agents, or personnel;
E. The services offered by the Company or that are, or will be, developed and/or offered by the Company;
F The price of any of the Company's services;
G. The wages and benefits paid to the Company's employees and agents;
H. The types and amounts of expenses incurred or profits made by the Company in its operations;
I. The techniques, business methods, management and financial expertise of the Company; and
J. Any other information which the Company deems confidential and secret, of which I may become aware.

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In addition, during my employment and the time thereafter, all information listed above shall be considered a trade secret and the property of the Company and any and all records, paper, documents and/or copies thereof pertaining to such information shall be returned immediately upon the termination of my employment.

Def.'s Mot. for Summ. J., Ex. 1, Employee Confidential Information Non-Compete and Invention Agreement ¶ 5.

B. Disclosures and Accusations Made by Yocum

Rockwell appears to premise all of its claims for breach of contract, misappropriation of trade secrets, tortious interference, and defamation on three instances of wrongful disclosure of confidential or purportedly false information: (1) information disclosed in Yocum's complaint for wrongful termination filed in California; (2) statements made during a 5-10 minute telephone conversation on an unspecified date between Yocum and Michael Xirinachs, one of Rockwell's investors; and (3) statements made by Yocum to Christopher L. Carey, a reporter for an online publication, in response to questions from Carey during a phone interview about the allegations stated in the California complaint.

1. Allegations in the California Complaint

On January 20, 2012, Yocum filed his complaint for wrongful termination against Rockwell in the San Diego, California superior court. The case was removed to federal court in San Diego and later dismissed.

The complaint alleged that " a motivating factor for Plaintiff's termination [wa]s his reporting of, complaining about, and other opposition to fraudulent, unlawful, and unethical acts, including violations of Securities and Exchange Commission Regulation FD, violations of FDA regulations, violations of ICH Practices, and misrepresentations." Def.'s Mot. for Summ. J., Ex 4, Compl. ¶ 80, Yocum v. Rockwell Medical, No. 37-2012-91097 (Cal. S.Ct. Jan 20, 2012). The complaint alleged that while Yocum was employed by Rockwell, the company was conducting " clinical trials for Soluble Ferric Phosphate (" SFP" ), an experimental iron therapy drug intended to help treat iron-deficiency anemia." Id. ¶ 25. Yocum alleged that he repeatedly complained about and pointed out to Rockwell CEO, Robert Chioni, defects in the protocols that were used or planned for use in the clinical trials, and his concerns that the results of earlier " Phase IIb" trials did not support the decision to move ahead with " Phase III" trials.

As to the alleged defects in Rockwell's testing protocol for SFP, Yocum asserted, among other things, that: (1) " the [Phase IIb] study was a failure" ; (2) " the results of the study did not provide adequate efficacy data or dose ranging information to proceed directly to Phase III trials" ; (3) " because of the inadequate dose selection data, and lack of confirmation of efficacy in Phase II, as well as other untested major design aspects of the proposed Phase III trials, Plaintiff consistently and repeatedly urged Chioini and Rockwell to conduct additional Phase II studies before proceeding to Phase III" ; (4) in July 2011, the FDA " indicated agreement with Plaintiff's assessment [that] 'no dose response pattern was identified among the dose groups for SFP in [the] completed Phase II study'" ; (5) in December 2010, " the FDA . . . rejected Rockwell's proposed Phase III trial design" ; (6) " [d]espite the FDA's disapproval, Rockwell commenced Phase III trials" ; and (7) Rockwell " failed ...

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