GLOBUS MEDICAL, INC. v. VORTEX SPINE, LLC et al

Filing 106

ORDER THAT MOTION FOR PARTIAL SUMMARY JUDGMENT BY GLOBUS MEDICAL, INC. IS GRANTED IN PART & DENIED IN PART, ETC. FURTHER, UPON CONSIDERATION OF PLFF'S MOTION TO DISMISS VORTEX'S COUNTERCLAIMS & MOTION TO STRIKE CERTAIN ALLEGATIONS (DOC. NO. 81), COUNTS I & VI, III, IV, & V OF THE AMENDED COUNTERCLAIM ARE HEREBY DISMISSED WITH PREJUDICE. PLFF'S MOTION TO STRIKE PARAGRAPHS 6 & 20 OF DEFTS' ANSWER & PARAGRAPHS 5-8, & 25(C)-(E) OF VORTEX'S COUNTERCLAIM IS GRANTED; PLFF' S MOTION TO STRIKE PARAGRAPH 2, 92, & 118 OF DEFTS' ANSWER IS DENIED. VORTEX'S REQUEST FOR AN ENTRY OF DEFAULT ON COUNT II IS DENIED. DEFTS SHALL FILE AN AMENDED ANSWER & COUNTERCLAIMS BY 10/31/2016. SIGNED BY HONORABLE C. DARNELL JONES, II ON 9/30/16. 9/30/16 ENTERED AND COPIES E-MAILED.(kw, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
GLOBUS MEDICAL, INC.,
Plaintiff,
v.
VORTEX SPINE, LLC et al.,
Defendants.

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CIVIL ACTION
NO. 14-3105

ORDER
AND NOW, this 30th day of September, 2016, upon consideration of the Motion for
Partial Summary Judgment by Globus Medical, Inc. (“Plaintiff”), (Dkt No. 76), Memorandum of
Law in Support thereof, (Dkt No. 76-2), Statement of Undisputed Material Facts, (Dkt No. 76-3),
and the Response thereto by Vortex Spine, LLC and James Chapman Long (“Defendants”), (Dkt
No. 83), Memorandum of Law in Support thereof, (Dkt No. 84), Response to Plaintiff’s
Statement of Undisputed Material Facts, (Dkt No. 84-10 at 1-34), and Additional Statement of
Disputed Material Facts, (Dkt No. 84-10 at 35-80), Plaintiff’s Response to Defendants’
Additional Statement of Disputed Material Facts, (Dkt No. 92), Plaintiff’s Reply Memorandum
of Law in Support of its Motion for Partial Summary Judgment, (Dkt No. 96), Defendants’ SurReply Memorandum of Law in Support of its Opposition to Plaintiff’s Motion for Partial
Summary Judgment, (Dkt No. 97), and Defendants’ Supplemental Memorandum of Law, (Dkt
No. 104), it is hereby ORDERED that said Motion is GRANTED IN PART AND DENIED IN
PART:
1. The Court grants Plaintiff’s Motion for Partial Summary Judgment insofar as the
Court holds that Mr. Long breached EDA Section 5.1.2 through his activities with
M.I. Spine during the Term of the EDA, though the Court does not determine the
damages for said breach at this time; and, the Court holds that Vortex breached
EDA Section 5.5 by failing to assign Mr. Schaefer’s NCND Agreement to
Plaintiff upon request, and the Court grants specific performance for said breach.

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Vortex shall immediately assign its rights and benefits in Mr. Wallace Schaefer’s
NCND Agreement to Globus.
2. The Court denies Plaintiff’s Motion in all other respects.
FURTHER, upon consideration of Defendants’ Answer and Vortex’s Counterclaims,
(Dkt No. 75), Plaintiff’s Motion to Dismiss Vortex’s Counterclaims and Motion to Strike Certain
Allegations, (Dkt No. 81), and Vortex’s Response thereto, (Dkt No. 8), and in accordance with
the Court’s Memorandum Opinion on Plaintiff’s Motion for Partial Summary Judgment, it is
hereby ORDERED that:
1. Counts I & VI, 1 III, 2, IV, 3 and V 4 of the Answer and Counterclaim are hereby
DISMISSED WITH PREJUDICE;

1

In Count I and Count VI, Vortex alleges a claim for unfair competition and unfair business practices.
Vortex asserts a claim for tortious interference and unfair competition due to Globus seeking to enforce
the restrictive covenants in the Exclusive Distributor Agreement between Globus and Vortex and Mr.
Long in this litigation. To assert a claim for international interference, Vortex must allege “(1) the
existence of a contractual, or prospective contractual relation between the complainant and a third party;
(2) purposeful action on the part of the defendant, specifically intended to harm the existing relation, or to
prevent a prospective relation from occurring; (3) the absence of privilege or justification on the part of
[Globus]; and (4) the occasioning of actual legal damages as a result of [Globus’s] conduct.” Pawlowski
v. Smorto, 588 A.2d 36, 39-40 (Pa. Super. 1991). If “the means of competition are otherwise tortious with
respect to the injured party, they will also ordinarily constitute an unfair method of competition.” ID
Security Sys. Canada, Inc. v. Checkpoint Sys., Inc., 249 F.Supp.2d 622, 688 (E.D. Pa. 2003) (citing
Restatement (Third) § 1 cmt g.) Where a defendant’s actions are “not actionable but rather justified,” such
actions do not constitute unfair competition. Acumed LLC v. Advanced Surgical Services, Inc., 561 F.3d
199, 228 (3d Cir. 2009). The Court has repeatedly found that the EDA is enforceable. Thus, Globus’s
actions to enforce the terms of the EDA during the course of this litigation were justified. The Court
dismisses these claims with prejudice.

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In Count III, Vortex alleges a claim for misappropriation of trade secrets. To sustain a claim for
misappropriation of trade secrets, Vortex must show (1) the existence of a trade secret, (2) which was
communicated in confidence to Globus and (3) used by Globus in breach of that confidence, (4) to the
detriment of Plaintiff. GE Capital Mortgage Servs., Inc. v. Pinnacle Mortgage Inv. Corp., 897 F. Supp.
854, 870 (E.D. Pa. 1995). Vortex states that it “did not share” its “confidential information regarding the
surgeon customers that Vortex routinely used in sales of spinal products” with Globus. (Counterclaim ¶
19.) Vortex argues that it did share some confidential information with Globus, including “information
about the surgeons that Long created over the course of his career, before Globus even formed” and
“orders Vortex processed with Globus.” (Dkt No. 88 at 19.) Even assuming that these client lists and
orders constitute trade secrets, Vortex has failed to plead any way in which Globus ever used these secrets
in breach of Vortex’s confidence. The Court dismisses this claim under Federal Rule of Civil Procedure
12(b)(6).
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2. Plaintiff’s motion to strike paragraphs 6, and 20 of Defendants’ Answer and
paragraphs 5-8, and 25(c)-(e) of Vortex’s Counterclaims is GRANTED;
Plaintiff’s motion to strike paragraph 2, 92, and 118 of Defendants’ Answer is
DENIED; 5

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In Count IV, Vortex asserts a claim for wrongful injunction. This relates to the Court’s issuance of two
temporary restraining orders. On June 9, 2014, the Court entered a temporary restraining order enjoining
Defendants from selling to or soliciting customers in its former territory. (Dkt No. 10.) On September 5,
2014, the Court entered a second temporary restraining order requiring Globus to deliver to Globus any
and all No Competition and Non-Disclosure Agreements Vortex had with its former sales representatives.
(Dkt No. 27.) The Court never issued a preliminary injunction order for either TRO. Vortex failed to cite
any case showing that the wrongful injunction common law remedy was applicable to temporary
restraining orders. No preliminary injunction was issued in this case. This claim is dismissed with
prejudice.

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In Count V, Vortex alleges an abuse of process claim that Globus obtained two temporary restraining
orders “for the improper purpose to prevent [Vortex and Mr. Long] from competing with Globus.”
(Counterclaim ¶ 37.) To sustain a claim for abuse of process, Vortex “must show that the defendant used
legal process against the plaintiff in a way that constituted a perversion of that process and caused harm to
the plaintiff.” Gen. Refractories Co. v. Fireman’s Fund Ins. Co., 337 F.3d 297, 304 (3d Cir. 2003).
Globus sought temporary restraining orders to effectuate restrictive covenants. Vortex is correct that
Globus used this process to “prevent [Vortex and Mr. Long] from competing with Globus,” but incorrect
that such a purpose was “improper.” Exactly the opposite is true. This is exactly the proper purpose of this
process. Further, Vortex explains that the “abuse of process claim is based on the fact that Globus knew
that under the EDA Understanding...that their goodwill belonged to Vortex.” (Dkt No. 88 at 19.) As the
Court has ruled in the attendant Memorandum Opinion on the Motion for Summary Judgment, the Court
cannot consider the EDA Understanding in evaluating whether Vortex or Mr. Long breached the EDA.
For the purposes of this Motion, the Court takes the facts of the EDA Understanding in the light most
favorable to Vortex. The Court agrees with Vortex that the parole evidence rule is irrelevant here, as the
EDA Understanding putatively occurred after the signing of the EDA. However, as the Court explains in
greater detail in its Memorandum Opinion, the EDA itself explicitly precludes oral modification to the
EDA. The EDA Understanding was an oral agreement. There is no dispute of fact that there is no written
agreement to amend the terms of the EDA. Thus, under the unambiguous and enforceable terms of the
EDA, the EDA Understanding did not amend the EDA. This claim is dismissed with prejudice.
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“[T]he court may order stricken from any pleading any insufficient defense or any redundant,
immaterial, impertinent or scandalous matter.” Fed. R. Civ. P. 12(f). The movant “must clearly show that
the matter sought to be stricken is outside the issues in the case and is prejudicial.” River Rd. Dev. Corp.
v. Carlson-Corp.-Northeast, 1990 WL 69085, at *7 (E.D. Pa. 1990). Such motions are generally “not
favored and usually will be denied unless the allegations have no possible relation to the controversy and
may cause prejudice to one of the parties, or if the allegations confuse the issues in the case.” Id. at *3.
The Court denies the Motion as it pertains to allegations of the Court’s prior rulings. The Court notes that
it again confirms the forum selection clause and choice of law provision in the EDA are valid and
enforceable. (See Dkt No. 15, Dkt No. 72.) However, the Court finds it unnecessary to strike the
pleadings. The Court grants the Motion as it pertains to allegations against Plaintiff and its founders that
are wholly unrelated to this litigation, impertinent, and scandalous. The Court further grants the Motion
regarding Plaintiff’s counsel as such ad hominem attacks are impertinent and scandalous. The Court
admonishes that all counsel shall act with respect and courtesy to fellow counsel.
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3. Vortex’s request for an entry of default on Count II is DENIED; 6
4. Defendants shall file an Amended Answer and Counterclaims by October 31,
2016.
BY THE COURT:
/s/ C. Darnell Jones, II
_____________________________
C. Darnell Jones, II

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J.

Parties are permitted to serve a motion to dismiss regarding only some of a Complaint’s or a
Countersuit’s claims. Parties are only required to answer every count after the resolution of the motion to
dismiss. This request for entry of default is premature.
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