United States District Court, W.D. Michigan, Southern Division
T. NEFF United States District Judge
Stryker Sales Corporation (“Stryker”) filed this
action alleging claims related to the breach of an employment
non-compete agreement by Stryker's former San Francisco
“Bay South” area sales representative, Defendant
Johnny McNany (“McNany”), who was hired by
Styker's competitor, Defendant Integra Lifesciences
Corporation (“Integra”), to work in the same
sales territory. The case is before the Court on
Stryker's Motion for Partial Summary Judgment (ECF
No.74), and Defendants' Cross-Motion for Summary Judgment
(ECF No. 79). After full briefing and review, the Court
concludes that oral argument is unnecessary to resolve the
Motions. See W.D. Mich. LCivR 7.2(d). For the
reasons that follow, the cross-motions are denied.
was employed by Stryker in the Bay Area South Territory of
California as a sales representative selling products and
services for Stryker's Neuro/Spine/Ear, Nose & Throat
(NSE) business unit for nine years, until he resigned to work
for Stryker's competitor, Defendant Integra. Stryker
alleges that McNany violated the terms of his Sales
Representative Confidentiality, Intellectual Property, and
Non-Competition Agreement with Stryker (“Stryker
Agreement” or “Agreement”), which contains
the following confidentiality and non-compete provisions:
2.4 Non-Disclosure of Confidential
At all times during and after my employment with Stryker, I
will not disclose or communicate any Confidential Information
to any competitor or third party or remove materials from
Stryker containing Confidential Information except as
necessary for me to perform services properly for Stryker
during my employment.
4.1 No Solicitation of Customers and
For a period of one year following the termination of my
employment for any reason, I will not solicit or contact,
directly or through others, for the purpose of competing or
interfering with any part of Stryker's business (1) any
customer that purchased Stryker products at any time during
the last three years of my employment with Stryker, (2) any
prospect that received or requested a proposal to purchase
Stryker products at any time during the last three years of
my employment with Stryker, (3) any affiliate of such
customer or prospect, or (4) any of the individual customer
or prospect contacts that I established during my employment
4.2 No Competition with Stryker.
For a period of one year following termination of my
employment for any reason, I will not (1) work for (as an
employee, consultant, contractor, agent, or otherwise) any
company that competes with Stryker Neuro/Spine/ENT in the
Sales Territory for which I was responsible during the last
year of my employment with Stryker, or (2) become a principal
or owner of any competitor of Stryker Neuro/Spine/ENT that
does business in the Sales Territory for which I was
responsible during the last year of my employment with
Agreement also contains a choice-of-law and venue provision:
6.2 Governing Law and Venue. This Agreement
will be construed in accordance with and governed for all
purposes by the laws of the State of Michigan. I agree and
consent that any and all litigation between Stryker and me
relating to this Agreement will take place exclusively in the
State of Michigan and consent to the jurisdiction of the
federal and/or state courts in Michigan.
parties have filed a comprehensive Joint Statement of
Material Facts (JSMF), consisting of 191 enumerated
paragraphs with supporting exhibits (ECF Nos. 76, 78), which
the parties have relied upon and cited in their arguments on
the cross-motions. The following facts are summarized from
Stryker Instruments, a division of Stryker Corporation,
develops, manufactures and sells, among other things,
products in the treatment of neurological, spinal and
ear/nose/throat (“ENT”) surgical equipment.
Stryker Neuro/Spine/Ear, Nose, & Throat
(“NSE”) is a business unit of Stryker Instruments
and produces the NSE line of products.
McNany was previously employed by Stryker Sales to sell the
Stryker NSE line of products, including the Sonopet.
Among other things, Stryker NSE products assist doctors in
performing surgeries to remove cancerous tumors. Stryker
sells several different types of surgical equipment
including, but not limited to, the Sonopet® Ultrasonic
Aspirator System (“Sonopet”), which allows
surgeons to control soft tissue and allow fine bone
dissection so that the surgeon can then ablate tumors.
Because the Sonopet is expensive and requires a large,
up-front investment on the part of hospitals and medical
centers, it is known in the industry as “capital
equipment.” 7. Stryker also sells disposable products
that are designed to be used with the Sonopet, including
tubing sets, tips and suction canisters.
addition to the Sonopet, Stryker also sells Silverglide®
bipolar forceps which are included in the NSE line of
products. Bipolar forceps coagulate blood and stop bleeding
McNany is a resident of California and lives and works in the
city of San Jose, California.
McNany was born in California and has been a California
resident his entire life.
Defendant Johnny McNany was hired by Stryker Sales in July
2006 to sell its NSE line of products. McNany's assigned
territory was in California.
While McNany was employed by Stryker, McNany sold Stryker NSE
products in Stryker's Bay Area South Territory
(“Territory”) in California, which includes San
Jose, Santa Clara, Palo Alto, Stanford, and other towns south
of San Francisco.
McNany was the exclusive Stryker NSE Sales Representative
assigned to the Territory and held this position in
California for over nine (9) years, since the beginning of
his employment with Stryker.
While employed by Stryker Sales, all of McNany's
customers and prospective customers were located in the
Territory in California.
McNany resigned from Stryker on September 15, 2015.
Integra is a corporation organized under the laws of Delaware
with its principal place of business in New Jersey.
Integra is a medical device company which manufactures
certain products for the NSE market that compete with certain
products manufactured by Stryker.
McNany was hired by Integra to service its “San
Francisco 2” Territory (hereinafter, “SF2”)
which is similar to Stryker's Bay Area South Territory
but “[t]here are pieces in [the Bay Area] territory
that are not in the SF2 territory.” 22. Stryker's
Bay Area South Territory and Integra's SF2 Territory both
include the hospitals and clinics associated with Stanford
University in Palo, Alto, California, including Stanford
University Hospital (“Stanford Main”), Stanford
Ambulatory Surgical Center, Lucile Packard Children's
Hospital (“LPCH”), and the VA Palo Alto
(collectively, “Stanford Medical Center”), as
well as Salinas Valley Memorial Hospital
one and a half years prior to Integra's hiring of McNany,
there was no dedicated representative for Integra's SF2
Territory, and it was instead serviced on an “as-needed
basis.” 24. McNany testified that Integra hired him in
order to “secure [McNany's] assistance in
representing a territory that had been hemorrhaging business
because it hadn't been represented in  a year and a
half.” He elaborated that “[the territory] was
hemorrhaging business because the Mayfield headrest
wasn't being represented properly. [The territory] was
hemorrhaging business in many areas.” 26. McNany was
hired by Integra to sell its neurosurgical product line,
including the CUSA and related disposables, as well as the
Buzz Bipolar Forceps.
CUSA is an ultrasonic aspirator that competes directly with
There have been various versions of the CUSA, including the
CUSA Excel, the CUSA Excel Plus (also referred to as CUSA 2)
and the CUSA NXT.
Integra currently sells the CUSA Excel Plus and the CUSA NXT.
The main difference between the CUSA Excel Plus and CUSA NXT
is the display for the settings. The CUSA Excel Plus has an
analog display while the CUSA NXT has a digital display.
Integra no longer sells the CUSA Excel and will stop
providing service for that device as of December 31, 2016
unless the customer has an existing service contract which
goes beyond that date. Integra and its representatives have
referred to this process as “becoming obsolete”
or “end-of-life.” 31. Integra also sells
Buzz® bipolar forceps which compete with Stryker
Silverglide® bipolar forceps.
remaining 90% of Integra products currently sold by McNany do
not compete with Stryker NSE products.
MCNANY'S EMPLOYMENT WITH STRYKER A. McNany's
Agreement with Stryker 38. The Stryker Agreement
contains an “Introduction” which states:
my employment, I will receive and have access to materials
and information regarding Stryker's medical device
technologies, products, services and sales that are
proprietary and confidential to Stryker. I recognize that
these materials and information are an important and valuable
asset to Stryker and that Stryker has a legitimate interest
in protecting the confidential and proprietary nature of
these materials and information.
has spent and will continue to spend substantial time and
money developing its medical device technologies, products,
and services and training its employees on its technologies,
products and services. I recognize that these technologies,
products and services are an important and valuable asset to
Stryker and that Stryker has a legitimate interest in
protecting these technologies, products and services.
also has dedicated time and resources in developing and
maintaining relationships with customers and potential
customers in the sales territory that I will be assigned.
During my employment with Stryker, I understand that Stryker
expects me to continue to develop and maintain these
relationships on its behalf. Stryker will dedicate its time
and resources in assisting me to develop and maintain these
relationships for Stryker. I recognize that these
relationships are an important and valuable asset to Stryker
and that Stryker has a legitimate interest in protecting
Among other things, the Stryker Agreement contains a one year
non-compete provision, a one year customer non-solicit
provision, and a Michigan choice of law and forum selection
Stryker Agreement also contains a non-disclosure provision
which applies to Stryker's confidential information, as
defined in section 2.1(B) of the Stryker Agreement.
McNany admits that he took no steps to comply with the
Non-Compete Provision and Customer Non-Solicit Provision of
the Stryker Agreement.
Section 5.4 of the Stryker Agreement provides that:
reasonable and necessary for the protection of the goodwill
and continued business of Stryker that [McNany] abide by the
covenants and agreements contained in this Agreement during
and following my employment with Stryker and that Stryker
will suffer irreparable injury, loss, harm, and damage if I
engage in conduct prohibited in this Agreement. My experience
and abilities are such that compliance with this Agreement
will not cause any undue hardship or unreasonable restriction
on my ability to earn a livelihood and that the restrictions
on my activities during and after employment do not prevent
me from using skills in any business or activity that is not
in competition with Stryker.
Agreement defines Confidential Information as:
“know-how, trade secrets, and technical, business and
financial information and any other non-public information in
any way learned by [him] during [his] employment with
Stryker, including, but not limited to: (1) prices, renewal
dates and other detailed terms of customer or supplier
contracts and proposals; (2) information concerning the
Stryker Entities' customers and potential customers,
including, but not limited to, customer or prospect lists,
customer or prospect data and compilation of customer or
prospect information; (3) supplier and distributor lists; (4)
pricing policies, methods of delivering services and
products, and marketing and sales plans or strategies; (5)
product know-how, product technology and product development
strategies and plans; (6) personnel or payroll records or
information; (7) forecasts, budgets and other non-public
financial information; and (8) expansion plans, management
policies and other business strategies and policies.
McNany's Access to Training and Confidential
Prior to his employment with Stryker, McNany had no
experience selling medical devices and no relationships with
any surgeons in the Stryker Territory.
McNany received all of his initial training in the sales of
medical devices from Stryker. Stryker provided McNany with
the information needed to develop relationships with Stryker
customers in the Stryker Territory.
Stryker also provided free ongoing training on the sales of
medical device products, including at Stryker's annual
mid-year meetings and through online courses.
his role as a Stryker Sales Representative, McNany had access
to the following information regarding the Stryker NSE
a. Product acquisition and development in the NSE line of
b. Customer retention strategies, including strategies that
apply to Stanford Medical Center;
c. Marketing plans and promotional strategies for all NSE
products, including but not limited to the Sonopet;
d. Pricing strategies, including terms and conditions of
sales, profit margins, product pricing discounts, and bulk
purchase pricing for all NSE products, including Sonopet;
e. Innovative and proprietary financing, leasing and payment
options for all NSE products, including the Sonopet; and
f. Competitive strategies including those against Integra.
McNany's Performance Improvement Plan
July 2015, McNany was put on a Performance Improvement Plan
the year or so leading up to the PIP, McNany had focused on
selling the Sonopet and, as a result, struggled to meet his
purpose of the Performance Improvement Plan was to encourage
him to diversify his sales, specifically to encourage him to
sell more high-speed drills.
INTEGRA'S RECRUITMENT AND HIRING OF MCNANY
recruiter contacted McNany about an open position at Integra
in late July 2015.
or about August 5, 2015, McNany met with Eduardo Cortez
(“Cortez”), Integra's Regional Business
Manager, Northwest Region, for an initial job interview
regarding potential employment at Integra.
Cortez testified that at the interview McNany told him that
he had a non-compete provision in his Stryker Agreement.
Integra admits that it was fully aware of the Stryker
Agreement before hiring McNany.
After their initial meeting, Cortez contacted Integra's
legal department regarding McNany, and Cortez testified that
the legal department contacted McNany “in some
way.” 72. McNany forwarded the non-compete to