A federal appeals court yesterday split up a sales rep poaching dispute between Stryker (NYSE:SYK) and Johnson & Johnson (NYSE:JNJ) subsidiary DePuy Orthopaedics, sending some claims to a California district court and others to the federal court in New Jersey.
Stryker’s Howmedica unit in June 2014 accused DePuy and a distributor of gutting its presence in the northern California orthopedic reconstructive surgery market with a “calculated and deliberate raiding” of its sales force there, according to a lawsuit filed in the U.S. District Court for New Jersey. The suit alleged that DePuy helped a quintet of Stryker Howmedica sales reps – Brett Sarkisian, Keegan Freeman, Michael Nordyke, Taylor Smith and Bryan Wyatt – defect and take some of their customers with them.
The defendants won their bid to transfer the case to the U.S. District Court for Northern California, but in making that decision the New Jersey court did not consider one California-based defendant’s argument that the Garden State bench lacked jurisdiction. That defendant, DePuy distributor Golden State Orthopaedics, filed a separate suit in Northern California, alleging that the non-compete clauses in Stryker’s employment agreements violated California law; that case was stayed after Stryker appealed to the U.S. 3rd Circuit Court of Appeals, citing a Supreme Court decision upholding forum-selection contract clauses.
The appeals court yesterday ruled that the claims against the five sales reps proceed in New Jersey, citing the forum-selection clauses in their contracts, but sent the claims involving Golden State to the Northern California court.
“Because the [New Jersey] District Court clearly and indisputably erred in transferring this case in its entirety to the Northern District of California, we will issue a writ of mandamus vacating the transfer order and instructing the [New Jersey] District Court on remand to sever Howmedica’s claims against DePuy and Golden State …, to transfer those claims to the Northern District of California …, and to retain jurisdiction over Howmedica’s claims against the five sales representatives,” wrote Circuit Court Judge Cheryl Ann Krause.
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