Miles was chief operating officer of NuVasive when he left that company in October 2017 to take the reins at Alphatec. NuVasive sued Miles a week later, claiming that he enacted a year-long scheme to secretly back Alphatec while discouraging NuVasive from acquiring the smaller company.
Although the job was in California, both companies are Delaware corporations. When NuVasive hired Miles, they both agreed that Delaware laws and courts would apply to the Miles’ employment contract. At the time, California law mandated that non-compete agreements in employment contracts were void. NuVasive claimed that Miles breached his non-compete and non-solicitation contracts under Delaware law.
On June 7, 2019, Delaware Chancery Court Vice Chancellor Sam Glasscock ruled that the non-compete portion of Miles’ contract was invalid because California did not recognize non-competes when Miles joined NuVasive. Yesterday, the same judge ruled that the non-solicitation of business portion of the contract was also invalid under California law.
The court then granted summary judgment in Miles’ and Aphatec’s favor, ending all of NuVasive’s non-competition and non-solicitation claims.
“We are pleased with the Delaware Court’s judgment and reasoning,” said Craig Hunsaker, Alphatec’s EVP and general counsel in a news release. “It confirms what we’ve known and said all along: NuVasive’s non-compete agreement was illegal from the start, Pat was free to resign and join ATEC, and he violated no law or enforceable contract in doing so. We believe NuVasive’s 2017 lawsuit and purposefully broad, public pronouncement of its specious claims against Pat were part of a calculated scheme aimed at punishing him for leaving NuVasive, tarnishing his reputation, dissuading others from leaving NuVasive and preemptively harming an emerging competitor, rather than at protecting any legitimate legal interest. This judgment represents a significant step toward setting the record straight and eliminates the vast majority of NuVasive’s case. We look forward to addressing the few remaining claims, and are extremely confident that in the end, Pat and ATEC will prevail in full.”
As a result of the judgment, and the termination of all causes of action related to the non-compete and non-solicitation provisions, NuVasive’s basis for recovering compensation paid to Miles under his NuVasive employment agreement also is eliminated, as is any claim for damages NuVasive alleges to have suffered due to Miles’ and Alphatec’s lawful competitive activities, according to Alphatec.
“I appreciate the court’s validation of my right to leave NuVasive to lead the new ATEC,” Miles said. “It echoes what I told NuVasive when I resigned, in an attempt to dissuade prior leadership from engaging in wasteful litigation. Having said that, the success of this company will be neither defined nor derailed by lawsuits. Our sole focus is on making spine surgery better, to the benefit of patients in the operating room. I couldn’t be more confident in the team we have assembled. We are in the midst of 12 new product releases in 2019, including the highly anticipated launch of our revolutionary Alpha Informatix platform. ATEC is positioned to be the standard-bearer in spine; we remain single-mindedly committed to that vision. We will not be distracted by legal antics as we continue to unleash this Organic Innovation Machine™.”
NuVasive said that it does not comment on pending litigation.