Johnson & Johnson (NYSE:JNJ) unit DePuy Synthes last week sued Orthofix (NSDQ:OFIX) and a pair of former DePuy sales reps, alleging that its rival lured the reps and two other colleagues away so it could poach DePuy clients in Alabama and Texas.
According to the suit, filed in the U.S. District Court for Eastern Texas, DePuy hired Thomas Wells and Michael Sewell in 2012 as sales consultants for DePuy Synthes for the territory around Dothan, Ala. After the duo quit in March 2017 within hours of each other, the suit alleged, routine inventory checks at one of their clients revealed Orthofix devices and instruments that were sterilized and ready for surgery at on of their DePuy clients, Southeast Alabama Medical Center.
“In other words, Orthofix equipment had been brought in and was ready to be used in surgery,” according to the suit. And although DePuy products were slated to be used in multiple procedures that week, all but one of those cases were canceled.
“Despite its best efforts, DePuy Synthes has not done any further business at SEAMC,” according to the March 22 lawsuit. “Orthofix was able to convert an account worth millions of dollars practically overnight by using the investments DePuy Synthes made its customers relationships, goodwill, specialized training, and confidential information through Messrs. Wells and Sewell, inducing them to leverage these investments to Orthofix’s benefit.”
The lawsuit does not name Wells and Sewell as defendants, but two other sales consultants in its Longview, Texas, sales region were named in the suit. DePuy accused Orthofix of targeting Scott Mackey and Miranda Middleton in late 2017, alleging that they accompanied “key DePuy Synthes’ surgeon customers to visit Orthofix’s headquarters in Lewisville, Texas,” a month before their “abrupt and simultaneous resignations.”
“Mackey and Middleton encouraged and aided each other in deciding to leave DePuy Synthes and join Orthofix and assisted each other in executing a simultaneous resignation from DePuy Synthes,” the suit alleged. “DePuy Synthes learned shortly after their resignations, but while they were still employed with DePuy Synthes, that Mackey and Middleton started to make arrangements to have Orthofix equipment available at their accounts while they were still employed with DePuy Synthes.”
The lawsuit seeks actual and compensatory damages, disgorgement of all profits generated by Wells Sewell, Mackey and Middleton, legal costs and interest.