Johnson & Johnson (NYSE:JNJ) subsidiary DePuy Synthes can’t stop a former sales rep from working for an Arthrex distributor in Idaho, a federal judge ruled last week.
DePuy hired Richard “Jake” Williams in June 2015 to rep its orthopedic implants in Boise and had him sign employee secrecy, intellectual property, non-competition and non-solicitation agreements barring him from working for the competition for 18 months after leaving DePuy, according to court documents.
But after his Sept. 11 departure, Williams signed on with Arthrex distributor Steelhead Surgical, prompting DePuy to sue in the U.S. District Court for Idaho for breach of contract and ask Judge Ronald Bush for a preliminary injunction barring Williams from taking the new job.
Williams and DePuy dispute the circumstances of his departure, according to the documents, with Williams claiming he was shown the door after his supervisor and regional manager led him to believe that his job was in jeopardy. But the supervisor and regional manager claimed that his job was not in jeopardy and that nobody said it was.
Although Bush found that DePuy could probably show that Williams violated the employee secrecy agreement, he ruled that the differing accounts of his departure muddy the waters.
“It is the nature of such things that lawsuits involve a dispute or disagreement. But the parties’ dispute about a central fact of this matter – the circumstances of Williams’s departure from DePuy – is remarkably stark. If DePuy’s version of facts is correct, then it has clearly shown a likelihood of success on a right to enforce the employee secrecy agreement. But if Williams’s version is correct, then there may exist an equitable defense against enforcement of the contract against him. The present record contains directly conflicting declarations and no discovery or other evidence,” Bush wrote. “In short, DePuy has not made the clear showing required to satisfy the first element of the preliminary injunction standard.”
DePuy also failed to show that it would suffer irreparable harm from Williams’ defection, the judge found given the closed nature of the Boise orthopedic implant market.
“In such a market, any harm DePuy might ultimately suffer, including any perceived loss of potential sales to Steelhead, is subject to proof of historical, projected and actual sales levels. If DePuy loses no sales, it is not harmed. If it does lose sales, and the actions of Williams in violation of the employee secrecy agreement are the reason for such losses, then its damages are reparable and compensable in damages. In sum, the proof that would evidence any such damages is available to DePuy,” Bush wrote in denying the company’s bid for a preliminary injunction.