Counter-claims brought by Richard Steitzer, a former sales rep for Stryker (NYSE:SYK), can stand in a poaching spat between Stryker, Steitzer and Biomet, a Michigan federal judge ruled last week.
Stryker sued orthopedics rival Biomet last year, accusing it of a scheme to poach reps and business from Stryker in Louisiana and New York. Steitzer and Christopher Ridgeway allegedly conspired with Biomet in the scheme, according to the September 2013 lawsuit filed in the U.S. District Court for Western Michigan. Steitzer quit in June 2013 to work for Biomet; Stryker fired Ridgeway Sept. 10 of that year, according to the lawsuit, after discovering that he was allegedly running a pair of medical supply businesses on the side.
Last week Judge Robert Bell shot down a settlement alleged by Biomet and Steitzer, finding that Steitzer and Biomet failed to prove that an agreement was reached, according to the documents. Two days later, Bell left intact Steitzer’s claims that Biomet owes him severance pay and, because it hasn’t paid, breached his employment contract with Stryker. Steitzer’s claim that the breached contract also means he’s not bound by the confidentiality and non-compete clauses of the contract was also left standing, Bell ruled in the July 24 opinion.
Steitzer’s claims are not, as alleged by Stryker, mirror-images of the company’s claim that Steitzer breached their deal by soliciting Stryker customers for Biomet and sharing confidential information, Bell decided. That’s because a mirror image "would be a request for a declaration that Steitzer did not breach the non-compete agreement or the confidentiality agreement," he wrote.
"That is not what Steitzer is requesting in his counterclaim. Instead, Steitzer is requesting a declaration that, pursuant to the terms of the non-compete agreement and promises Stryker made in its June 17, 2013 letter, Steitzer is permitted to compete with Stryker because Stryker voluntarily ceased post-termination severance payments," Bell wrote, noting that the case is complicated by Steitzer’s complaint relies on an alleged amendment to the non-compete clause.
"Where there is not a complete identity of factual and legal issues between the complaint and the counterclaim and there is some uncertainty as to whether resolution of the complaint will completely dispose of the counterclaim, the better practice is not to dismiss the counterclaim at this early stage of the trial," the judge wrote.
And Bell shot down Stryker’s argument that Steitzer’s entire breach of contract claim is invalidated per the terms of the deal.
"Assuming, without deciding, that Stryker is correct in its assertion that Steitzer is bound by the restrictions even if Stryker does not make severance payments, the court does not agree that this would dispose of Steitzer’s entire breach of contract claim. Steitzer has alleged that Stryker is required to make severance payments and that its failure to do so constitutes a breach. Steitzer has also alleged that he has suffered substantial damages as a result of that breach. Stryker agreed to make severance payments for the period that the restrictions are in effect unless Steitzer breached an agreement with Stryker," Bell wrote. "Steitzer has denied breaching the non-compete agreement and the confidentiality agreement in his answer to the amended complaint. Because the issue of whether Steitzer breached an agreement with Stryker has not been established as a matter of law, the court cannot find, as a matter of law, that Stryker did not breach the non-compete agreement by failing to make severance payments."