Healthwerks Inc et al v. Stryker Spine

Filing 215

ORDER signed by Judge Pamela Pepper on 9/30/2016 GRANTING 100 Biomet's Motion for Summary Judgment; DENYING 112 Howmedica Osteonics Corp. d/b/a Stryker Spine's Motion for Summary Judgment; GRANTING IN PART AND DENYING IN PART 120 Plai ntiffs' Motion for Summary Judgment - Granting in favor of Count I of the amended complaint and Denying as to Count II of the amended complaint. Also Denying as to Count VI of the amended counterclaim/third party complaint; GRANTING 121 the sales representatives' Motion for Summary Judgment. The Court DISMISSES Counts I, II, III, IV, V, VII, VIII, IX and X of the amended counterclaim/third party complaint. (cc: all counsel) (kgw)

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN

HEALTHWERKS, INC.,
SPINE GROUP OF WISCONSIN, LLC,
GREAT LAKES SPINE GROUP, LLC, and
PAUL R. BREITENBACH,

Case No. 14-cv-93-PP

Plaintiffs,
and
BIOMET SPINE, LLC,
Involuntary Plaintiff,
v.
HOWMEDICA OSTEONICS CORP.
d/b/a STRYKER SPINE,
Defendant,
v.
MIKE ROGERS, SCOTT OLIN,
DAN GRAY, JOHN MURRAY,
NICK NOVAK, ANNIE BRAUER,
and TODD POTOKAR,
Third-Party Defendants.

ORDER GRANTING BIOMET’S MOTION FOR SUMMARY JUDGMENT (DKT.
NO. 100); DENYING STRYKER’S MOTION FOR SUMMARY JUDGMENT
(DKT. NO. 112); GRANTING IN PART AND DENYING IN PART THE
PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT (DKT. NO. 120); AND
GRANTING THE SALES REPRESENTATIVES’ MOTION FOR SUMMARY
JUDGMENT (DKT. NO. 121)
_____________________________________________________________________________

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I.

INTRODUCTION
Before the court are several motions for summary judgment filed by (1)

the plaintiffs (Healthwerks, Inc., Spine Group of Wisconsin, LLC, Great Lakes
Spine Group, LLC, Paul R. Breitenback) with one of the third party defendants
(Todd Potokar), (2) the involuntary plaintiff, Biomet Spine, LLC, (“Biomet”), (3)
the defendant, Howmedica Osteonics Corp. d/b/a Stryker Spine (“Stryker”),
and (4) the rest of the third party defendants (Mike Rogers, Scott Olin, Dan
Gray, John Murray, Nick Novak and Annie Brauer) (collectively “the sales
representatives”). In the main, the parties dispute the extended enforceability of
the last written contract between “Spine Group” (consisting of Spine Group of
Wisconsin, LLC, Great Lakes Spine Group, LLC, and Paul Breitenbach) and
Stryker. Dkt. No. 140 at 1. After reviewing the pending motions, briefs,
proposed facts, and relevant law, the court will grant in part the motion filed by
Spine Group, Healthwerks, and third-party defendant Potokar. Dkt. No. 120.
The court will deny Stryker’s motion. Dkt. No. 112. The court will grant
Biomet’s motion. Dkt. No. 100. Finally, the court will grant the sales
representatives’ motion. Dkt. No. 121. In sum, the court will dismiss Counts I,
II, III, IV, V, VII, VIII, IX, and X of the amended counterclaim. The court will
grant summary judgment in favor of the plaintiffs on Count I of the amended
complaint. The court will allow the parties to proceed to trial on Count VI of the
amended counterclaim and Count II of the amended complaint.

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II.

RELEVANT UNDISPUTED FACTS
A. Summary Of The Facts
Stryker and Biomet compete against each other in the spine-related

instrument and implant market. Stryker Spine’s Civil L.R. 56 Proposed
Material Facts In Support of Motion For Summary Judgment, Dkt. No. 114 at
¶1. Both companies manufacture and sell spinal instruments and implant
products. Id. In 2005, Stryker granted Spine Group the exclusive right to
distribute its products in Wisconsin and Northern Michigan.1 Id. at ¶6. Spine
Group employed the third party defendants—Mike Rogers, Scott Olin, Dan
Gray, John Murray, Nick Novak and Annie Brauer—to act as sales
representatives for the products. Id. at ¶17. Spine Group failed, however, to
execute sales representative agreements (“SRAs”) with Brauer and Murray. Id.
at ¶¶17-18. In 2010, Todd Potokar started working with Spine Group. ¶31.
In January 2008, the parties reaffirmed their relationship based on
terms similar to those in the 2005 agreement, but through two separate agency
agreements (“the 2008 agreements”). Id. at ¶8. When the 2008 agreements
expired, Spine Group continued to distribute Stryker’s products while the
parties negotiated a new agreement. Id. at ¶59; Plaintiffs’ and Third-Party
Defendants’ Proposed Material Facts in Support of Their Motions For Summary
Judgment, Dkt. No. 138 at ¶¶14, 15, 53. Biomet proposed a contract during
the same time period. Dkt. No. 114 at ¶114. The plaintiffs filed the complaint in

The 2008 agreements also reference Iowa, but the parties did not raise this in
the briefing. See Dkt. No. 119-100 at 50.
1

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this case after Spine Group and Healthwerks entered into a contract with
Biomet, rather than with Stryker. Id. ¶114.
B. Stryker’s Contract With Spine Group
Among other things, the 2008 agreements contained prohibitions on
disclosing confidential information, a non-compete provision ending one year
after termination of the agreements, obligations requiring Spine Group to
procure SRAs with express language, and obligations requiring both parties to
follow set procedures upon termination. Id. at ¶¶9, 12, 14-16, 59.
The 2008 agreements started with an “Initial Term” encompassing a oneyear period, which automatically extended for two years—until December 31,
2010—because Spine Group met its performance quotas. Id. at ¶34. Stryker
could extend the Initial Term only if it notified Spine Group “in writing not less
than sixty (60) days prior to the last day of the Initial Term that it desires to
extend this Agreement.” Dkt. No. 138 at ¶15.
On December 9, 2010, instead of extending the existing agreements,
Stryker sent a revised renewal agreement to Spine Group. Dkt. No. 114 at ¶36.
Spine Group did not sign that agreement, and the 2008 agreements terminated
on December 31, 2010. Id. at ¶36; Biomet Spine, LLC’s proposed material facts
in support of its motion for summary judgment Dkt. No. 102 at ¶17.
Termination triggered the availability of the one year non-compete and
termination procedures, but neither party initiated the procedures. Dkt. No.
114 at ¶¶12, 59. Instead, the parties continued to negotiate. Dkt. No. 138 at
¶53.
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C. Negotiations Between Spine Group And Stryker
As of August 2013, two and a half years into negotiations, Stryker and
Spine Group still had “major contract concerns.” Id. at ¶53. At this point,
Stryker proposed an extension agreement retroactively changing the
termination date of the 2008 agreements, but Spine Group did not sign. Dkt.
No. 102 at ¶¶23, 26. The parties met again in September to negotiate, but no
contract resulted. Dkt. No. 114 at ¶121. In December, the parties scheduled
telephone conferences to discuss the contract, and Stryker sent a revised
agency agreement on January 6, 2014. Id. at ¶¶123, 124, 127, but see Dkt. No.
163 at 55 (Spine Group disputes that the conferences actually happened).
Despite not having a contract, Spine Group continued to sell Stryker products
and maintain the business relationship. See e.g. id. at ¶125 (On December 20,
2013, Breitenbach asked his assistant to register him and a few
representatives for Stryker’s national sales meeting, set to begin on January
16, 2014); Id. at ¶128 (Potokar left a voicemail, on January 6, 2014, for one of
Stryker’s sales leaders, stating that he called to go through the 2014 budgeting
exercise).
On January 14, 2014, Spine Group informed Stryker that it was
terminating their relationship. Id. at ¶132. Stryker sent a reminder email to
Spine Group concerning its ongoing obligations, including the one year noncompete. Id. at ¶134.

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D. Negotiations Between Biomet And Spine Group
In 2013, there was minimal overlap between Biomet’s and Stryker’s
customers in the region served by Spine Group. Id. at ¶74. In early 2013,
during the same period that Stryker and Spine Group were negotiating, Spine
Group and Biomet began meeting to discuss a new partnership and to assess
Spine Group’s obligations to Stryker. Id. at ¶¶75, 95; Dkt. No. 102 at ¶31; Dkt.
No. 138 at ¶53. On May 13, 2013, Potokar proposed merging Spine Group with
another company, called Healthwerks, which would become Biomet’s
distributor. Dkt. NO. 102 at ¶35.
Spine Group negotiated terms with Biomet throughout much of 2013. Id.
at ¶37. On June 27, 2013, Spine Group provided Biomet with signed copies of
the 2008 agreements. Dkt. No. 114 at ¶95. Biomet and Spine Group entered
into a mutual non-disclosure agreement on July 16, 2013, id. at ¶88, and
outside counsel exchanged emails concerning restrictions on disclosing
confidential materials in September of 2013, id. at ¶101.
On December 12 and 13, 2013, the sales representatives signed SRAs
with Biomet. Id. at ¶¶112-13. On December 26, 2013, Spine Group,
Healthwerks, and Biomet executed an exclusive SRA, effective January 1, 2014
(later amended to January 14, 2014). Id. at ¶114; Dkt. No. 102 at ¶38. Finally,
Biomet, Healthwerks, and Spine Group executed an indemnity agreement in
the event that Stryker decided to sue. Dkt. No. 114 at ¶116.
Healthwerks became Biomet’s distributor on January 14, 2014. Dkt. No.
102 at ¶40.
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E. Litigation Commences
On January 15, 2014, Healthwerks and Spine Group filed a complaint in
state court, seeking a declaratory judgment that the 2008 agreements no
longer were enforceable. Dkt. No. 1-1. Stryker removed the case to this court
on January 28, 2014. Dkt. No. 1. On February 27, 2014, the parties filed a
joint submission substantiating jurisdiction. Dkt. No. 19. On September 26,
2014, Stryker filed an answer, counterclaims, and a third party complaint. Dkt.
No. 40.
The court resolved two motions to dismiss and a prior summary
judgment motion. Dkt. No. 39; Dkt. No. 81.
On June 15, 2015, the plaintiffs filed an amended complaint, Dkt. No.
86, and Stryker filed an amended counterclaim and third-party complaint, Dkt.
No. 87. Biomet filed its summary judgment motion on October 13, 2015, Dkt.
No. 100. On November 16, 2015, Stryker (Dkt. No. 112), Spine Group,
Healthwerks and Potokar (collectively “the plaintiffs”) (Dkt. No. 120); and the
sales representatives (Dkt. No. 121) filed their motions for summary judgment.
All counts of the amended complaint, amended counterclaim and third party
complaint are at issue. The court will address each count in turn.
III.

SUMMARY JUDGMENT STANDARD
A court must grant summary judgment when “there is no genuine

dispute as to any material fact and the moving party is entitled to judgment as
a matter of law.” Fed. R. Civ. P. 56(a). Material facts are those “facts that might
affect the outcome of the suit under the governing law,” and a dispute about a
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material fact is genuine if a reasonable jury could find in favor of the
nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
When determining whether summary judgment is appropriate, the court
views all facts and draws all reasonable inferences in favor of the nonmoving
party. Herzog v. Graphic Packaging Int’l, Inc., 742 F.3d 802, 806 (7th Cir.
2014). But, if the court “cannot resolve the conflict between these two positions
without deciding which side to believe,” summary judgment is not appropriate.
Wolf v. Buss (America) Inc., 77 F.3d 914, 922 (7th Cir. 1996)(quoting Sarsha v.
Sears, Roebuck & Co., 3 F.3d 1035, 1041(7th Cir. 1993)). Credibility
determinations and choosing between competing inferences is a jury function.
Id.
With that said, “inferences that are supported by only speculation or
conjecture will not defeat a summary judgment motion.” Herzog, 742 F.3d at
806 (quoting Tubergen v. St. Vincent Hosp. & Health Care Ctr., Inc., 517 F.3d
470, 473 (7th Cir. 2008)). The opposing party cannot simply rely on allegations
or denials in its pleadings; it must also “introduce affidavits or other evidence
setting forth specific facts showing a genuine issue for trial.” Anders v. Waste
Mgm’t of Wis., 463 F.3d 670, 675 (7th Cir. 2006). “[A] party will be successful
in opposing summary judgment only when that party presents definite,
competent evidence to rebut the motion.” EEOC v. Sears, Roebuck & Co., 233
F.3d 432, 437 (7th Cir. 2000)(quoting Smith v. Severn, 129 F.3d 419, 427 (7th
Cir. 1997)). Thus, a court appropriately grants summary judgment “against a
party who fails to make a showing sufficient to establish the existence of an
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element essential to that party’s case, and on which that party will bear the
burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
IV.

CHOICE OF LAW ANALYSIS
The 2008 agreements contain a New Jersey choice of law provision. Dkt.

No. 87 at ¶ 44. Because the parties dispute whether New Jersey or Wisconsin
law governs the claims arising out of the 2008 agreements, the court must
start with a choice-of-law analysis. Dkt. No. 158 at 7; See Auto-Owners Ins. Co.
v. Websolv Computing, Inc., 580 F.3d 543, 547 (7th Cir. 2009) (quoting Wood
v. Mid-Valley Inc., 942 F.2d 425, 427 (7th Cir. 1991))(“Courts do not worry
about conflict of laws unless the parties disagree on which state’s law
applies.”).
“Where a district court's jurisdiction is based on diversity . . . the court
must follow the choice of law rules of the forum state to determine the
applicable substantive law.” Progressive N. Ins. Co. v. Mick White Renovations,
No. 04 C 7465, 2007 WL 899398, at *2 (N.D. Ill. Mar. 16, 2007)(citations
omitted). Under Wisconsin choice of law principles, a contractual choice of law
provision is enforceable only if it does not contravene important state law
public policies that would apply if the contract did not contain a choice of law
provision. Drinkwater v. Am. Family Mut. Ins. Co., 714 N.W.2d 568, 573-574
(Wis. 2006). Essentially, courts determine (1) the presumptive state law if no
choice of law provision existed and (2) whether enforcing the forum clause in
the contract would contravene important public polices of the presumptive
state. Id.
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In the absence of a choice-of-law provision, “the law of the forum should
presumptively apply unless it becomes clear that nonforum contacts are of the
greater significance.” Id. at 575-76 (quoting State Farm Mut. Auto. Ins. Co. v.
Gillette, 641 N.W.2d 662, 676 (Wis. 2002)). Wisconsin courts apply the
“grouping of contacts” rule to determine the state with which the contract has
its most significant relationship. State Farm Mut. Auto. Ins. Co., 641 N.W.2d at
671 (citing Haines v. Mid-Century Ins. Co., 177 N.W.2d 328 (1970)). “Relevant
contacts include: [1] place of contracting; [2] the place of negotiation of the
contract; [3] the place of performance; [4] the location of the subject matter of
the contract; and [5] the respective domiciles, places of incorporation and
places of business of the parties.” Sybron Transition Corp. v. Sec. Ins. Co. of
Hartford, 107 F.3d 1250, 1255 (7th Cir. 1997)(quoting Hystro Prods., Inc. v.
MNP Corp., 18 F.3d 1384, 1387 (7th Cir. 1994)). The quality of the contacts
determines which contacts are significant. Sybron Transition Corp., 107 F.3d
at 1255.
The 2008 agreements have the most significant relationship with
Wisconsin. Spine Group distributed Stryker products in Wisconsin and
Michigan. Dkt. No. 114 at ¶6. The collective parties referred to in this decision
as “Spine Group” are Wisconsin companies and residents. Dkt. No. 138 at ¶1;
Dkt. No. 19 at ¶1-3. The only ties these contracts had to New Jersey were the
fact that Stryker is a New Jersey corporation and the fact that the contracts
provide a New Jersey choice of law provision. Dkt. No. 87 at ¶1, 44. Because

10

the contract covers product sales in Wisconsin with Wisconsin companies and
residents, it follows that Wisconsin law should apply.2
Moving on to the second step, applying New Jersey law would contravene
Wisconsin public policy. Wisconsin has a strong public policy invalidating any
covenant imposing an unreasonable restraint on employment. Wis. Stat. §
103.465. The purpose of this law is to encourage mobility of workers. See, e.g.
Farm Credit Servs. of N. Cent. Wis., ACA v. Wysocki, 627 N.W.2d 444, 447
(Wis. 2001)(citing Gary Van Zeeland Talent, Inc v. Sandas, 267 N.W.2d 242
(1978)). Wisconsin courts will not enforce a provision that imposes an
unreasonable restraint, “even as to any part of the covenant or performance
that would be a reasonable restraint.” Wis. Stat. §103.465. New Jersey has a
similar standard requiring reasonable covenants, but, in contrast to Wisconsin
courts, if a New Jersey court finds a clause to be unenforceable, “rather than
deem the covenant void ab initio, [c]ourts will enforce them to the extent
reasonable under the circumstances.” Richards Mfg. Co. v. Thomas & Betts
Corp., No. CIV. 01-4677, 2005 WL 2373413, at *4 (D.N.J. Sept. 27, 2005).
Wisconsin, then, requires the employer to craft, at the outset, covenants
which contain only such restrictions are reasonably necessary; if the employer
includes unreasonable restrictions, the entire covenant is unenforceable. New
Jersey, in contrast, will not deem the entire covenant unenforceable if it
As Wisconsin clearly has the most significant relationship with the contract, it
is not necessary for the court to analyze the five choice-influencing
considerations. A court proceeds to this step only if the court cannot clearly
identify a state with the most significant relationship. Drinkwater, 714 N.W.2d
at 576.
2

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contains unreasonable restrictions. Rather, New Jersey law encourages courts
to try to partially enforce the covenants if they can do so “without injury to the
public and without injustice to the parties.” Id. If this court were to apply New
Jersey law, it would contravene Wisconsin’s stronger public policy against
unreasonable restraints. The court concludes that Wisconsin law governs this
dispute.
V.

ANALYSIS OF CLAIMS
A. Stryker Does Not Have A Breach Of Contract Claim Against Spine
Group Or The Sales Associates.
In Count I of the amended counterclaim, Stryker alleges that Spine

Group breached several provisions of the 2008 agreements. Dkt. No. 87 at
¶116. In Count VIII of the amended counterclaim, Stryker alleges that the sales
representatives breached the sales representative agreements. Id. at ¶219.
In direct contrast, the plaintiffs as, in Count I of the amended complaint,
that the court find that the 2008 agreements were no longer enforceable after
January 1, 2012; in other words, they ask the court to find that there were no
contracts in place with Stryker that they could have breached. Dkt. No. 86 at
¶46.
Under Wisconsin law, a plaintiff must demonstrate three elements in
order to prove a breach of contract claim: (1) that a valid contract existed (2)
that the defendant breached that contract and (3) that damages flowed from
that breach. Matthews v. Wisconsin Energy Corp., 534 F.3d 547, 553 (7th Cir.
2008) (citing Nw. Motor Car, Inc. v. Pope, 187 N.W.2d 200 (Wis. 1971)).

12

i.

The First Element (Existence of a Valid Contract): Spine Group and
Stryker did not have a valid contract after December 31, 2010.

Spine Group does not dispute the existence of the 2008 agreements or
their terms. Dkt. 140 at 5. The parties dispute only whether any of the terms
extended beyond December 31, 2011. Id. at 5.
a. The 2008 agreements expired on December 31, 2010.
The 2008 agreements terminated under an express provision requiring
Stryker to extend the agreements, in writing, no less than sixty days prior to
the last day of the initial term. Dkt. No. 138 at ¶15. Instead of extending the
terms in writing, Stryker sent a revised renewal agreement which Spine Group
did not execute. Dtk. No. 114 at ¶36. Because Stryker did not extend the
agreements and because the parties failed to enter into a new contract, the
2008 agreements terminated on December 31, 2010, by their own terms. Dkt.
No. 102 at ¶17. As a result, the one year non-compete restriction lapsed on
December 31, 2011. Dkt. No. 138 at ¶14-15.
b. The only provisions in the 2008 agreements which extended
beyond December 31, 2011—the confidentiality provisions—are
not enforceable.
Even though the 2008 agreements terminated on December 31, 2010,
the express language of the agreement prohibited disclosure of confidential
information for an unlimited time period. Dkt. No. 114 at ¶ 9. This type of
confidentiality provision is unenforceable under Wis. Stat. §103.465,3 which
provides:
Stryker argues that Wis. Stat. §103.465 does not apply to the contract
between Stryker and Spine Group. Dkt. No. 158 at 7. This is an interesting
3

13

A covenant by an assistant, servant or agent not to
compete with his or her employer or principal during
the term of the employment or agency, or after the
termination of that employment or agency, within a
specified territory and during a specified time is lawful
and enforceable only if the restrictions imposed are
reasonably necessary for the protection of the
employer or principal. Any covenant, described in this
section, imposing an unreasonable restraint is illegal,
void and unenforceable even as to any part of the
covenant or performance that would be a reasonable
restraint.
See also Friemuth v. Fiskars Brands Inc., 681 F. Supp. 2d 985, 989 (W.D. Wis.
2010)(“The Wisconsin Supreme Court has indicated that the lack of any time
limitation renders a restrictive covenant unreasonable per se.”)(citing Gary Van
Zeeland, 267 N.W.2d at 250). Although the statute appears to address only
non-compete provisions, the Wisconsin Supreme Court also applied it to
unreasonable non-disclosure agreements in Gary Van Zeeland Talent, Inc. v.
Sandas, 267 N.W.2d at 250. In that case, the provision at issue provided that
“the employee will never, without time limitation, disclose the list of customers
to any person.” Id. at 250. The court noted that “[e]ven were this customer list
argument, considering the fact that Stryker argues that Spine Group owes it a
fiduciary duty, as an agent would. Dkt. No. 87 at ¶238. In any event, the
contract explicitly refers to Spine Group as an independent contractor. Dkt. No.
119-99 at ¶14. This court finds, however, that the 2008 agreements fall within
the scope of Wis. Stat. §103.465 because the statute is meant to be construed
liberally. See Priority Intern. Animal Concepts, Inc. v. Bryk, No. 12-C-150,
2012 WL 1995113, *6 (E.D. Wis. June 1, 2012)(applying the statute to a
similar relationship); Heyde Companies, Inc. v. Dove Healthcare, LLC, 654
N.W.2d 830, 834 (Wis. 2002)(construing the statute liberally); but see County
Materials Corp. v. Allan Block Corp., 431 F.Supp.2d 937, 950 (W.D. Wis.
2006)(refusing to extend the scope of Wis. Stat. §103.465 to an agreement to
use patented technology); H&R Block Eastern Tax Services, Inc. v. Vorpahl,
255 F.Supp.2d 930, 934 (E.D. Wis. 2003)(refusing to extend the scope of Wis.
Stat. §103.465 to franchise agreement).
14

a trade secret, subject to protection within a reasonable geographic area and
for a reasonable period of time, this provision, which sets no limits with respect
to either is unreasonable and void.” Id.
Where a restraint of trade is tolerated, it is permitted
only to the extent absolutely necessary to afford
reasonable protection. As indicated above, restraints
may be unreasonable by a limitation that is overbroad
in terms of geographic area or time. A facet of the time
limitation which must be considered in determining its
reasonableness is the extent to which the information
is permanently valuable to the employer.
Id.
The confidentiality provisions in the 2008 agreements provided that
Spine Group could not disclose confidential information “during the term
hereof and after the termination of this Agreement for any reason whatsoever . .
. .” Dkt. No. 114 at ¶9. Stryker argues that there is an implicit time limitation
in the definition designating confidential information as information “generally
[not] known in the industry.” Dkt. No. 158 at 13. The court disagrees. There is
no evidence that the parties contemplated a date certain, or a specific number
of years, until Stryker’s information would be “generally known in the
industry.” Restricting disclosure of information not “generally known in the
industry” does not imply a time limitation, because there is no way to know
when such information might become generally known.
Stryker, therefore, cannot prove the first element of a breach of contract
claim—the existence of a valid contract—for any conduct occurring after the
non-compete provision lapsed on December 31, 2011, because the only

15

obligations Spine Group had to Stryker after December 31, 2011 were invalid
restrictions under Wis. Stat. §103.465.
ii.

The Second Element (Breach of a Valid Contract): Spine Group
breached the 2008 agreements prior to their expiration; the sales
representatives did not breach the sales representative agreements.

Stryker alleges that while the 2008 agreements remained in effect—prior
to December 31, 2011—Spine Group breached the following provisions of the
agreements: (1)confidentiality and non-disclosure, (2) procurement and
production of SRAs, (3) express language required to be included in SRAs, (4)
duties upon termination, and (5) non-competition provisions. Dkt. No. 87 at
¶116. Stryker also alleges that the sales representatives breached the SRAs (of
which it was a third party beneficiary) by selling Biomet products. Id. at ¶219.
The court finds that Spine Group breached the agreements during the
period in which the contract could be enforced, in two ways. First, the contract
required Spine Group to execute SRAs with all of its sales representatives, and
to include specific language in those agreements. Dkt. No. 114 at ¶¶14, 16.
Spine Group admits that it did not obtain SRAs from two of the sales
representatives—Brauer and Murray. Id. at ¶18. Second, the contract provided
that upon its termination, Spine Group was required to turn over its
confidential information and return all products. Dkt. No. 87 at ¶132. Spine
Group did not do this—it continued to sell products for Stryker. Dkt. No. 114
at ¶59. Stryker has proven the first and second elements of breach of contract
as to Spine Group.

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The court finds, however, that the sales representatives did not breach
the SRAs. The SRAs are valid contracts, enforceable by Stryker as a third party
beneficiary, only to the extent that Spine Group had a valid contract with
Stryker. As discussed above, the 2008 agreements between Stryker and Spine
Group expired on December 31, 2010, and the one-year non-compete provision
expired on December 31, 2011. The sales representatives did not sign SRAs
with Biomet until December 2013, well after Spine Group’s agreements with
Stryker had terminated. Dkt. No. 102 at ¶¶ 17 111, 112. Stryker has failed to
prove the first and second elements of a breach of contract claim against the
sales representatives.
iii.

The Third Element (Damages): Stryker did not suffer damages from
the breach.

While the court concludes that Spine Group did breach the contract with
Stryker by not signing SRAs with all the sales representatives, and by failing to
return (and continuing to sell) its products, Stryker has not provided sufficient
information to support the third element of a breach-of-contract claim—the
damages element.
A breach without damages does not warrant recovery on a breach of
contract claim. East Lake Towers Corporate Center Ltd. Partnership v. Scott
Paper Co., 347 F.Supp.2d 629, 633 (E.D. Wis. 2004). Stryker alleges numerous
damages from Spine Group’s breach. Dkt. No. 87 at ¶137. Mainly, it alleges
that it lost millions of dollars in revenue, including a 75% drop in the territory.
Dkt. No. 113 at 15-16. Additionally, it alleges that the en masse departure of
the plaintiffs and sales representatives caused harm beyond monetary losses
17

because of the disclosure of confidential information and interference with
customer relationships. Id.
As the court explained above, the agreements were not enforceable past
January 1, 2012, including the provisions requiring SRAs. No reasonable jury
could find that Stryker’s loss of territory was based on conduct occurring
before negotiations started with Biomet in 2013. Further, Stryker’s argument
that Spine Group failed to follow the termination procedures is not persuasive,
when Stryker’s conduct indicates that Stryker wanted Spine Group to continue
distributing its products.
Because Stryker’s damages did not flow from the alleged conduct of
Spine Group or the sales representatives, the court will grant summary
judgment in favor of the plaintiffs and the sales representatives, and will
dismiss Counts I and VIII of the amended counterclaim.
iv.

Because the court finds that the contract expired on December 31,
2010, the court will grant summary judgment in favor of the
plaintiffs on Count I of the amended complaint, and deny summary
judgment .

In Count I of the amended complaint, the plaintiffs ask the court to find
that the 2008 agreements terminated no later than January 1, 2011, and that
the non-compete provisions terminated no later than January 1, 2012. Dkt.
No. 86 at ¶53. The court agrees that from January 1, 2012 through the
present, the 2008 agreements were no longer binding on the plaintiffs or any of
their agents or representatives. The court will grant summary judgment in
favor of the plaintiffs on Count I of the amended complaint. For the same

18

reasons, the court will deny Stryker’s request for summary judgment as to
Counts I and VIII of the amended counterclaim and third-party complaint.
B. Stryker Did Not Have An Implied Contract With Spine Group
In Count III of the amended counterclaim/third-party complaint, Styker
alleges that Stryker and Spine Group had an implied contract tracking the
material terms of the 2008 agreements. Dkt. No. 87 at ¶¶156-57.
A “contract is implied in fact where the intention . . . is not manifested by
direct or explicit words between the parties.” Theuerkauf v. Sutton, 306 N.W.2d
651, 658 (Wis. 1981)(quoting Erickson v. Goodell Oil Co., Inc., 180 N.W.2d 798
(1970)). Instead it “is to be gathered by implication or proper deduction from
the conduct of the parties, language used or things done by them, or other
pertinent circumstances attending the transaction.” Id.
Although “Wisconsin courts are wary of implying terms into a contract to
which the parties have not expressly agreed,” the courts will allow a claim to
survive “to the extent that it is reasonable to infer from the course of dealings
that the parties understood the nature of plaintiff’s provision of certain services
and agreed to it.” Fleming Companies, Inc. v. Krist Oil Co., 324 F.Supp.2d 933,
944 (W.D. Wis. 2004); Dickman v. Vollmer, 736 N.W.2d 202, 208 (Wis. Ct. App.
2007)(“An implied contract may be established by the parties’ conduct without
any words being expressed in writing or orally, if from such conduct it can
fairly be inferred that the parties mutually intended to agree on all the terms.”)
It follows that a contract implied in fact arises from “mutual meeting of the
minds and of intention to contract.” Schaller v. Marine Nat. Bank of Neenah,
19

388 N.W.2d 645, 649 (Wis. Ct. App. 1986)(citing Theuerkauf, 306 N.W.2d at
657).
Styker alleges that the course of dealings between Stryker and Spine
Group created an implied contract, which included material terms of the 2008
agreements. Dkt. No. 87 at ¶¶156-57. Spine Group allegedly breached this
implied contract by, among other things, terminating the agreement without
cause and distributing competing products in the region. Id. at ¶151. The court
finds that the parties did not manifest intent to be bound by the terms of the
2008 agreements.
First, the fact that the parties were negotiating a new contract
demonstrates a lack of intent to contract at the 2008 terms. The Seventh
Circuit has stated that “evidence that the parties were negotiating a new
contract rebuts the presumption” that a contract exists when parties
“continue[] to do business governed” by the terms of an expired contract.
Consol. Bearings Co. v. Ehret-Krohn Corp., 913 F.2d 1224, 1230 (7th Cir.
1990)(citing Foster v. Springfield Clinic, 410 N.E.2d 604, 607 (1980)). Although
this case interprets Illinois law, the reasoning is persuasive in this context.
Continued negotiations demonstrate an intent not to be bound by a previous
contract.
The parties were negotiating a new contract during the time that Stryker
alleges that an implied contract existed. See e.g. Dkt. No. 114 at ¶127. But
Stryker kicked off negotiations by sending Spine Group a new contract, instead
of extending the 2008 agreements. Id. at ¶36. After an extended period of time
20

without a contract, Stryker proposed a retroactive extension agreement—
implying that the 2008 agreements were not currently enforceable—which
Spine Group did not sign. Dkt. No. 102 at ¶26. Evidence that Spine Group
continued to sell Stryker products and operate as if some terms were still in
place is not enough to overcome evidence demonstrating that the parties had
not had a meeting of the minds as to all the terms. See Consol. Bearings Co.,
913 F.2d at 1230.
Second, the 2008 agreements preclude a finding that there was an
implied contract. The parties included the following clause in the 2008
agreements: “[n]o modifications or waiver of any part of th[e] agreement shall
be binding upon either party unless in writing.” Dkt. 140 at 11. An implied
contract would amount to a waiver of the express provision in the 2008
agreements stating that Strkyer had to extend the agreement “in writing not
less than sixty (60) days prior to the last day of the Initial Term . . . .” Dkt. No.
138 at ¶15. Stryker’s argument that Spine Group had to follow the precise
terms of the contract necessarily implies that Stryker had to follow the “no
modifications or waiver” provision. Judge Stadtmueller raised this point in his
order denying the motion to stay the case for arbitration:
Moreover, as noted above in Section Two, each of the
Agency Agreements provides that “[n]o modifications or
waiver of any part of th[e] Agreement shall be binding
upon either party unless in writing.” (Docket # 7–1 at
47 and 100); (Docket # 21 at 9). Here, it is undisputed
that the Agency Agreements expired by their terms on
December 31, 2010. (Docket # 7–1 at 1[1[ 1–10). To be
sure, the record contains no evidence of a written
modification of the Agency Agreements' terms. Nissan
North America, Inc. v. Jim M'Lady Oldsmobile, Inc., 486
21

F.3d 989, 997 (7th Cir.2007) (“Nissan's argument
would render meaningless the provision of the Dealer
Agreement that required all changes to the agreement
to be made in a writing signed by both parties.”).
Healthwerks, Inc. v. Stryker Spine, No. 14-CV-93-JPS, 2014 WL 4388586, at *2
(E.D. Wis. Sept. 5, 2014).
A reasonable jury could not find that the parties intended to remain
bound by all the terms of the 2008 agreements beyond December 31, 2011, or
that there was an implied contract beyond that date. The court will grant
summary judgment in favor of the plaintiffs as to Count III, and will dismiss
Count III of the amended counterclaim.
C. Stryker Does Not Have an Estoppel Claim Against Spine Group.
Stryker captioned Count VII of the amended counterclaim, “Promissory
and Equitable Estoppel (In the Alternative).” Dkt. No. 87 at 39. In this count,
Stryker argues that because Spine Group continued to negotiate a new
agreement, and because it didn’t tell Stryker that it had, at the same time,
been negotiating with Biomet, Spine Group misled Stryker into letting it
continue to act as its agent. Dkt. No. 87 at ¶¶204-209. It alleged that it relied
on this misinformation to its detriment, and it asked the court to bar Spine
Group from benefitting from any continued relationship it had with Stryker. Id.
at ¶1124. The caption line of Count VII indicates that Stryker pled this claim
“[i]n the [a]lternative],” id. at page 39; in its brief, Stryker argues that it pled the
The amended counterclaim numbered the paragraphs in Count VII from 200
to 209, then numbered the next two paragraphs following 209 as “111” and
“112.” Dkt. No. 87 at 40. The amended counterclaim then returns to paragraph
210 in the first paragraph of Count VIII. Id. at 41.
4

22

estoppel cause of action “in the event the Court (or fact finder) determines that
an implied contract did not exist.” Dkt. No. 158 at 26.
Stryker titled Count VII a claim for both promissory and equitable
estoppel. The difference between promissory estoppel and equitable estoppel
lies in the intended use. See Baures v. North Shore Fire Dept., 664 N.W.2d
113, n. 7 (Wis. Ct. App. 2003). Promissory estoppel is used as a sword while
equitable estoppel is a shield. Id. Wisconsin does not recognize equitable
estoppel as a claim. Schuetta v. Aurora Nat. Life Assur. Co., 30 F.Supp.3d 800,
803 (E.D. Wis. 2014). Thus, the court will not analyze Stryker’s claim for
equitable estoppel.
“To prevail on a promissory estoppel claim, a plaintiff must present
evidence establishing 1) a promise; 2) on which the promisor should reasonably
expect to induce action or forbearance; 3) which did induce such action or
forbearance; and 4) that injustice can be avoided only by enforcement of that
promise.” Beer Capitol Distributing, Inc. v. Guinness Bass Import Co., 290
F.3d 877, 880 (7th Cir. 2002)(citing Hoffman v. Red Owl Stores, Inc., 133
N.W.2d 267, 273 (Wis. 1965)). “A promise is a manifestation of intent by the
promisor to be bound, and is to be judged by an objective standard.” Id. at 880
(quoting Major Mat Co. v. Monsanto, 969 F.2d 579 (7th Cir. 1992)).
Stryker does not mention a “promise” in its brief. Rather, it argues that
Spine Group’s conduct—continuing to negotiate with Stryker after the 2008
agreements expired—and Stryker’s reliance on the appearance that Spine
Group was negotiating in good faith—was the equivalent of the “promise”
23

required to establish the first element of an estoppel claim. Dkt. No. 158 at 27.
The court disagrees, and finds this claim to be a re-framing of Stryker’s implied
contract argument. The court already has found that the negotiations
demonstrated that Spine Group did not intend continue to act as Stryker’s
exclusive distributor under the same arrangements that were set forth in the
2008 agreements. Indeed, as Stryker itself points out, the negotiations
continued for some three years after the 2008 agreements expired (id.); rather
that evidencing Spine Group’s promise to continue as before, these protracted
negotiations evidence an intent to change the contractual relationship. Stryker
cannot establish the first element of an estoppel claim, and the court will grant
summary judgment in favor of the plaintiffs on Count VII and dismiss Count
VII of the amended counterclaim.
D.

There Are Disputed Issues of Material Fact As to Whether the
Plaintiffs’ Are Equitably Estopped from Asserting their Breach
of Contract Claim against Stryker.

In Count II of the amended complaint, the plaintiffs alleged that the 2008
agreements provided that Spine Group was entitled to a termination payment
as of the date the agreements terminated (December 31, 2010), and that
Stryker has “repeatedly admitted” this. Dkt. N. 86 at ¶55. They alleged that
despite the fact that Spine Group “complied with all of its obligations” under
the contract, Stryker has not paid that termination fee. Id. at ¶¶56-57. Thus,
they argue, they are entitled to summary judgment on the issue of whether
Stryker breached the agreements by failing to make the termination payment.

24

In the brief in support of their motion for summary judgment, the
plaintiffs argued that they are entitled to judgment on Count II of the amended
complaint. Dkt. No. 140 at 39. They anticipated that Stryker would respond
that it did not have to make the termination payment, and would support this
argument with the assertion that Spine Group breached first by failing to
return Stryker’s products once the 2008 agreements terminated. Id. To head off
that anticipated argument, the plaintiffs stated that Stryker never asked for the
products to be returned; that, in fact, Stryker wanted the plaintiffs to keep the
products and continue to sell them for Stryker. Id. The plaintiffs argued,
therefore, that if they did breach the 2008 agreements, those breaches were not
material. Id. at 40-41.
In its response to the plaintiffs’ motions for summary judgment, Stryker
argues—as the plaintiffs predicted that it would—that “Spine Group cannot
prevail on its declaratory judgment claim that . . . it is entitled to a termination
payment under the 2008 Agreements (Count II) . . . .” Dkt. No. 158 at 40-41.
Stryker argues that, because Spine Group materially breached the 2008
agreements, it is not entitled to claim its termination payment—that Spine
Group’s breach excuses Stryker’s breach. Id. at 41.
The plaintiffs replied that Stryker failed to identify how any breach was
material, or to demonstrate that any breach was “prior” to Stryker’s failure to
make the termination payment. Dkt. No. 176 at 21. They argue that Stryker’s
assertion that Spine Group should’ve returned its product before it had to pay
the termination payment is a “technicality defense,” which flies in the face of
25

the intent of the contractual provision that the termination payment was due
as long as Spine Group honored the one-year non-compete. Id.
In Metropolitan Sewerage Commission of Milwaukee Cnty. v. R. W.
Const., Inc., 72 Wis. 2d 365, 387 (Wis. 1976), the Wisconsin Supreme Court
stated, “Wisconsin has long followed the doctrine that a material breach by one
party excuses subsequent performance by the other party.” See also,
Entzminger v. Ford Motor Co., 47 Wis. 2d 751, 755 (“a material breach by one
party to a contract excuses subsequent performance by the other party”)
(citations omitted). Under Wisconsin law, then, “a material breach by one party
may excuse subsequent performance by the other party.” Management
Computer Services, Inc. v. Hawkins, Ash, Baptie & Co., 206 Wis.2d 158, 183
(Wis. 1996) (citing R.W. Constr., 72 Wis.2d at 387; Entzminger, 47 Wis.2d at
755; and Shy v. Industrial Salvage Material Co., 264 Wis.118, 125 (Wis. 1953)).
“However, a party is not automatically excused from future performance
of contract obligations every time the other party breaches.” Id. “’If the breach
is relatively minor and not “of the essence”, the plaintiff is himself still bound
by the contract; he cannot abandon performance and get damages for a “total”
breach by the defendant.’” Id. (citations omitted). “The issue of whether a
party’s breach excuses future performance of the contract by the nonbreaching party presents a question of fact.” Id. (citing Shy, 264 Wis. at 125).
The court has found that Spine Group did breach the 2008 agreements,
by failing to sign SRAs with all of the sales representatives, and by failing to
return Stryker’s products after termination. But in section V(A)(iii) above, the
26

court concluded that those breaches were not material, because Stryker did
not suffer any damages. Thus, Stryker has not demonstrated that the plaintiffs’
breach was material, sufficient to excuse their obligation to make the
termination payment.
As noted above, however, Stryker argued in Count VII of the amended
counterclaim/third-party complaint that the plaintiffs should be equitably
estopped from pursuing their breach of contract claim because they took
actions that Styker argues were intended to mislead Stryker into continuing
negotiations that the plaintiffs knew never would result in a contract. While
Wisconsin law does not allow the doctrine of promissory estoppel to be used as
a sword, it does allow its use as a defensive shield. “It is clear from Wisconsin
law that equitable estoppel may be used as a defense—a ‘shield’ as the Court
and parties are referring to it . . . .” Schuetta v. Aurora Nat. Life Assur. Co., 30
F. Supp. 3d at 801. Thus, the court must consider whether the equitable
estoppel defense which Stryker has raised involves a genuine dispute as to an
issue of material fact.
In Bank v. Haster, Case No. 14-c-403, 2016 WL 750656 (E.D. Wis.,
February 23, 2016), Judge Randa described the elements of the equitable
estoppel defense as follows:
Equitable estoppel is a bar to the assertion of what would
otherwise be a right; it does not of itself create a right. Murray v.
City of Milwaukee, 252 Wis. 2d 613, 625 . . . (Wis. Ct. App.
2002) (citing Utschig v. McClone, 16 Wis. 2d 506, 509 . . . (Wis.
1962)). The requirements of equitable estoppel are: (1) action or
inaction, (2) on the part of the one against whom estoppel is
asserted, (3) which induces reasonable reliance thereon by the
27

other, either in action or non-action, and (4) which is to his or
her detriment. Id. at 547 n.9 (citing Milas v. Labor Ass’n of Wis.,
Inc., 214 Wis. 2d 1, 11-12 . . . (Wis. 1997)).
Id. at *9.
The court described, in the promissory estoppel section above, the
actions Stryker alleges that the plaintiffs engaged in to intentionally lead it to
believe that negotiations were ongoing, when in fact, the plaintiffs already had
inked an agreement with Biomet. Those allegations, the court finds, raise
several disputed issues of fact. Were the plaintiffs intentionally trying to
mislead Stryker? Did Stryker rely on the actions the plaintiffs took? Was that
reliance reasonable, given how long the negotiations went on without reaching
resolution? Did that reliance accrue to Stryker’s detriment? The answers to
these disputed questions are necessary to determine whether the plaintiffs are
equitably estopped from asserting their Count II breach of contract claim, and
those questions are questions of fact best answered by a jury.
Because there are genuine disputes as to issues of material fact
regarding whether Stryker has a valid equitable estoppel defense to the breach
of contract claim in Count II of the amended complaint, the court will deny the
plaintiffs’ motion for summary judgment on Count II of the amended
complaint, and will allow this claim to proceed to trial.
E. Stryker Does Not Have A Tortious Interference With Contract
Claim Against Biomet Or Healthwerks.
In Count II of the amended counterclaim, Stryker alleges that Biomet
and Healthwerks tortiously interfered with Stryker’s existing and prospective
contracts with Spine Group. Dkt. No. 87 at ¶139.
28

Wisconsin law requires a plaintiff to prove five elements to prove a claim
for “interference with a present or prospective contractual relationship.”
Burbank Grease Services, LLC v. Sokolowski, 717 N.W.2d 781, 796 (Wis.
2006). The plaintiff must prove that: “(1) the plaintiff had a contract or
prospective contractual relationship with a third party; (2) the defendant
interfered with the relationship; (3) the interference was intentional; (4) a
causal connection exists between the interference and the damages; and (5) the
defendant was not justified or privileged to interfere.” Id.
i.

Spine Group and Stryker did not have a contract.

The court already has found that there was no contract after December
31, 2010. The undisputed facts establish that Stryker and Spine Group were
involved in negotiations extending at least two and a half years after the
termination of the contract. Dkt. No. 138 at ¶53. Despite those negotiations,
the parties never reached agreement on the terms of a new contract.
ii.

Biomet and Healthwerks did not interfere with an existing
contractual relationship.

By the time Biomet and Healthwerks came into the picture in 2013, there
was no contractual relationship with which Biomet or Healthwerks could have
interfered. That contractual relationship had ended three or so years earlier. So
Biomet and Healthwerks could not have tortuously interfered with an existing
contractual relationship.

29

iii.

Biomet and Healthwerks did not interfere with an implied or
expected contractual relationship.

Stryker also asserts that it “had an implied contractual relationship
and/or the expectancy of such a relationship” regarding prohibitions on
competition, and that Biomet and Healthwerks interfered with those
relationships. Dkt. No. 87 at ¶139. The court already has concluded that the
parties did not have an implied contract. Even though tortious interference
with prospective contract is a cognizable claim,5 Stryker has failed to develop
this argument in any of its briefs; Stryker argued only the existence of an
implied contract. See Dkt. No. 158 at 15-16; Dkt. No. 113 at 20-22; Dkt. No.
173 at 16-19; Dkt. No. 115 at 16-27.
The court will grant summary judgment in favor of Biomet and the
plaintiffs as to Count II, and dismiss Count II of the amended counterclaim.
F.

Spine Group, Healthwerks, Biomet And The Sales
Representatives Did Not Tortiously Interfere With Stryker’s
Existing Business Relations.

In Counts IV and IX of the amended counterclaim/third-party complaint,
Stryker alleges that Biomet, Healthwerks and Spine Group tortiously interfered
with Stryker’s prospective and existing business relations with its customers.
Dkt. No. 87 at ¶167.
See Shank v. William R. Hague, Inc., 192 F.3d 675, 687 (7th Cir. 1999)
overruled by Hill v. Tangherlini, on other grounds, 724 F.3d 965 (7th Cir. 2013)
(“Plaintiffs are correct in asserting that we stated in Frandsen that the tort of
tortious interference ‘has undergone a steady expansion and now embraces
situations in which the interference is not with a contract right but merely with
an expectation’”)(citation omitted).
5

30

The parties begin by disputing whether Wisconsin recognizes the tort of
tortious interference with prospective business relations. It does not.
In 1999, the Seventh Circuit addressed this inquiry in Shank v. William
R. Hague, Inc., 192 F.3d at 675. In Shank, international sales representatives
sued for tortious interference with prospective business relationships after the
manufacturer under contract with their distributor terminated that contract,
stopped accepting orders from the sale representatives, and arranged for direct
sales to international distributors. Id. at 678-79. The plaintiffs argued that
tortious interference with prospective business relations was a subset of
tortious interference with contract. Id. at 685-86.
The Seventh Circuit found that even though some state and federal
courts used the terms “prospective economic relationship” and “prospective
contracts” interchangeably, these courts did not intend to broaden the scope of
the tort to include prospective business relations. Id. at 686, 688; see also
Nalco Chem. Co. v. Hydro Techs., Inc., 809 F.Supp. 672, 679 (E.D.Wis. 1992)
(construing a tortious interference with business relations claim as a claim for
intentional interference with contract “because tortious interference with
business relations appears to be an obsolete cause of action”). After an analysis
of the case law, the court concluded:
When these cases are viewed in the proper light, it is
clear to us that Plaintiffs' reliance on them to support
their argument for a broader application of the tortious
interference doctrine is misplaced. As we have set forth
in detail above, none of these cases involved a court
finding that mere economic or business relations with
a third party was sufficient to create a cause of action
under Wisconsin law for tortious interference in the
31

absence of an existing contract or sufficiently concrete
prospective contract. Instead, as the district court in
the instant case fairly surmised, those cases stand for
the larger proposition that a tortious interference claim
cannot stand without a showing by the plaintiff that
the defendant has interfered with some bargained-for
right of his or, at a bare minimum, a “sufficiently
certain, concrete and definite prospective [contractlike] relationship” between the plaintiff and the third
party. Plaintiffs have shown neither.
Shank , 192 F.3d at 689.
Stryker alleges that Biomet, Healthwerks and Spine Group tortiously
interfered with Stryker’s prospective business relations with its customers.
Dkt. No. 87 at ¶167. Because Wisconsin does not recognize the tort of tortious
interference with prospective business relations, to the extent that Stryker
alleges interference with an expectation of business relations, it has no claim.
Dkt. No. 87 at ¶163.
Wisconsin does recognize the tort of tortious interference with existing
business relationships. Shank, 192 F.3d at 689. But Stryker does not have a
claim under that cause of action, either. Stryker identifies some situations in
which the SAs spoke to Stryker customers about moving to Biomet while the
SAs allegedly continued to represent Stryker, and some customers who
purchased Stryker products from the SAs after termination of the contracts.
Dkt. No. 114 at ¶¶108-10; 140-45. It also argues that the SAs had, over time,
developed “long-term working relationships” with customers, and that the
customers were loyal to the SAs and “recognized them as the face of Stryker
Spine.” Id. at ¶¶26, 29. But these allegations—the fact that the SAs were
identified with Stryker, that they sold Stryker products to long-standing
32

customers, and that they talked to a couple of customers about moving to
Biomet—are not sufficient demonstrate “sufficiently certain, concrete and
definite prospective [contract-like] relationship[s].” Shank, at 689.
The court will grant summary judgment in favor of Biomet, the sales
representatives, and the plaintiffs on Counts IV and IX, and will dismiss
Counts IV and IX of the amended counterclaim.
G.

Spine Group, Healthwerks, Biomet, And The Sales
Representatives Did Not Maliciously Injure Stryker’s Business.

In Count V of the amended counterclaim, Stryker alleges that Spine
Group, Healthwerks, Biomet and the sales representatives willfully and/or
maliciously injured Stryker’s business in violation of Wis. Stat. §134.01. Dkt.
No. 87 at ¶¶176-179.
Wis. Stat. §134.01 states:
Any 2 or more persons who shall combine, associate,
agree, mutually undertake or concert together for the
purpose of willfully or maliciously injuring another in
his or her reputation, trade, business or profession by
any means whatever, or for the purpose of maliciously
compelling another to do or perform any act against
his or her will, or preventing or hindering another from
doing or performing any lawful act shall be punished
by imprisonment in the county jail not more than one
year or by fine not exceeding $500.
See also Maleki v. Fine-Lando Clinic Chartered, S.C., 469 N.W.2d 629, 634
(Wis. 1991) (quoting §134.01). “Thus, to prevail at trial on a section 134.01
claim, a plaintiff must prove that (1) the defendants acted together; (2) with a
common purpose to injure the plaintiff’s reputation or business; (3) with

33

malice; and (4) the plaintiff suffered financial harm.” Virnich v. Vorwald, 664
F.3d 206, 213 (7th Cir. 2011).
Biomet, Healthwerks, Spine Group and the sales representatives argue
that even if Stryker could prove the other elements, it has presented no
evidence of malice. Dkt. No. 140 at 36-37; Dkt. No. 101 at 29-30. The Seventh
Circuit, interpreting Wisconsin law, has defined malice as “doing a harm
malevolently for the sake of harm as an end in itself, and not merely as a
means to some further end legitimately desired [such as hurting someone else’s
business by competition].” Virnich, 644 F.3d at 213 (quoting Maleki, 469
N.W.2d at 635). “[A]n irrational desire to cause harm for the sake of harm is
actionable under section 134.01. A rational desire to cause harm for the sake of
competitive advantage is not. [B]oth parties to the conspiracy must have acted
out of malice for a plaintiff’s section 134.01 claim to survive.” Id. at 213-14
(emphasis in original). This claim “must not be based on the defendant’s intent
to gain a competitive advantage. To be actionable, the defendant’s motive is not
supposed to make sense. The plaintiff must allege and then prove an irrational
desire to harm for harm’s sake.” Id. at 214.
Stryker does not allege “an irrational desire to harm for harm’s sake.”
Dkt. No. 87 at ¶¶176-179. Biomet was Stryker’s competitor. Dkt. No. 114 at
¶1. Stryker’s contract with Spine Group terminated before Biomet started
negotiating with Spine Group. Dkt. No. 102 at ¶¶ 17-18. It is unclear how
Spine Group, Healthwerks, Biomet, or the sales representatives engaged in any
conduct that a jury could construe as irrational, or as attempting to commit
34

“harm for harm’s sake.” As Stryker admits, Biomet simply wanted to obtain
new business by taking over Stryker’s territory. Dkt. No. 114 at ¶¶86, 89. No
reasonable jury could find that this was an irrational intention.
The court will grant summary judgment in favor of the plaintiffs, Biomet,
and the sales representatives on Count V, and dismiss Count V of the amended
counterclaim.
H.

A Genuine Dispute Of Material Fact Exists Regarding The
Fraud Claim.

In Count VI of the amended counterclaim, Stryker alleges that Spine
Group made false representations that Stryker reasonably relied upon to its
detriment. Dkt. No. 87 at ¶¶185, 195.
In Wisconsin, “[t]he elements of a fraud claim are: (1) false
representation; (2) intent to defraud; (3) reliance upon the false representation;
and (4) damages.” Mackenzie v. Miller Brewing Co., 623 N.W.2d 739, 745 (Wis.
2001). The false representation must consist of a purposeful act. Doe v.
Archdiocese of Milwaukee, 700 N.W.2d 180, 193 (Wis. 2005).
Fraud consists of a purposeful, volitional act on the
part of the defrauding party.” Putnam v. Time Warner
Cable, 2002 WI 108, ¶ 27, 255 Wis.2d 447, 649
N.W.2d 626 (citing Black's Law Dictionary 670 (7th
ed.1999)). As a general rule, a “misrepresentation” is
required to support a claim of fraud. Mackenzie v.
Miller Brewing Co., 2001 WI 23, ¶ 18, 241 Wis.2d 700,
623 N.W.2d 739. “The general rule is that silence, a
failure to disclose a fact, is not misrepresentation
unless the nondisclosing party has a duty to disclose
that fact.” Lecic v. Lane Co., 104 Wis.2d 592, 604, 312
N.W.2d 773 (1981).
Id.
35

The parties dispute key facts involving the fraud claim. Dkt. No. 158 at
25-26; Dkt. No. 176 at 12-13. Essentially, Styker argues that Spine Group’s
conduct, described below, intentionally led it to believe that their business
relationship would continue into 2014. Dkt. No. 114 at ¶121.
On December 12, 2013, some of the sales representatives signed SRAs
with Healthwerks and Biomet. Id. at ¶122. It follows that, by that date at the
latest, Spine Group had finalized its plans to give its business to Biomet.6
Stryker alleges that, after this date, Spine Group continued to communicate
with Stryker as if it were continuing their relationship. For example, on
December 12th, Breitenbach emailed Stryker about the potential contract. Id.
at ¶122. On December 17th, 20th, and 30th, Breitenbach and Potokar7
allegedly participated in telephone conferences with Stryker about the potential
contract. Id. at ¶¶123-24. On December 20th, Breitenbach asked his assistant
to register him and some representatives for Stryker’s January 16th sales
conference. Id. at ¶125. On December 30th, Breitenbach reassured Stryker
that he was attending the sales meeting. Id. at ¶126. On January 6, 2014,
Potokar left a voicemail for Stryker about going over the 2014 budget. Id. at
¶128. Stryker argues that it relied on the communications, because it
continued to send additional revised contracts. Id. at ¶ 127.

Spine Group, Healthwerks and Biomet did not execute an exclusive sales
representative agreement until December 26, 2013. Dkt. No. 102 at ¶38; Dkt.
No. 114 at ¶114.
7 The parties dispute whether Potokar was a Spine Group principal. Dkt. No.
163 at ¶31.
6

36

Stryker argues that Spine Group took the above actions for the purpose
of maximizing damage to Stryker’s business. Dkt. No. 158 at 26. Stryker
argues that Spine Group intentionally delayed informing Stryker that it did not
intend to enter into a new contract in order to leave Stryker with no
representation in the area and no time to find new representation, allowing
Biomet to easily take over. Spine Group disputes whether many of these
communications even occurred. Dkt. No. 163 at 55. Because there are genuine
disputes as to issues of material fact regarding the fraud claim, the court will
deny summary judgment on Count VI of the amended counterclaim/thirdparty complaint, and allow that claim to proceed to trial.
I.

Spine Group And The Sales Representatives Did Not Owe
Stryker A Fiduciary Duty At The Time Of The Alleged Conduct.

In Count X of the amended counterclaim/third-party complaint, Stryker
alleges that Spine Group and the sales representatives breached the fiduciary
duty owed to it. Dkt. No. 87 at ¶241.
“Generally, there are two types of fiduciary relationships: (1) those
specifically created by contract . . . and (2) those implied in law due to the
factual situation surrounding the transactions and relationships of the parties
to each other and to the questioned transactions.” Production Credit Ass’n of
Lacaster v. Croft, 423 N.W.2d 544, 546 (Wis. Ct. App. 1988) (citing Denison
State Bank v. Madeira, 640 P.2d 1235, 1241 (Kan. 1982)).
Stryker alleges that Spine Group and the Sales Representatives owed it a
fiduciary obligation after the contract expired. Dkt. No. 87 at ¶238. The facts
do not support this assertion. As explained in the breach of contract section,
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there was no valid contract after December 10, 2010 and no further obligations
after December 31, 2011. Even if the 2008 agreements remained enforceable,
the express language in each agreement provides that it is not to be construed
to create a principal/agent relationship. Dkt. No. 119-99 at ¶14. Consequently,
Spine Group and the sales representatives did not owe Stryker a contractual
fiduciary duty.
Nor did Spine Group and the sales representatives owe Stryker an
implied fiduciary duty. Courts generally imply a fiduciary relationship to
balance the powers. Id. at 547 (“Manifest in the existence of a fiduciary
relationship is that there exists an inequality, dependence, weakness of age, of
mental strength, business intelligence, knowledge of facts involved, or other
conditions giving to one an advantage over the other.”)(citing Denison State
Bank, 640 P.2d at 1241). Stryker and Spine Group are sophisticated parties in
the midst of negotiating a new contract when the alleged conduct occurred.
Dkt. No. 114 at ¶121. The sales representatives are the less sophisticated party
in comparison to Stryker. Neither situation is one in which the court needs to
balance the powers.
The court will grant summary judgment in favor of Spine Group and the
sales representatives as to Count X, and dismiss Count X of the amended
counterclaim.
VI.

CONCLUSION
The court GRANTS Biomet’s motion for summary judgment. Dkt. No.

100.
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The court DENIES Stryker’s motion for summary judgment. Dkt. No.
112.
The court GRANTS the plaintiffs’ motion for summary judgment in their
favor as to Count I of the amended complaint, and DENIES the plaintiffs’
motion for summary judgment in their favor as to Count II of the amended
complaint. Dkt. No. 120.
The court DENIES the plaintiffs’ motion for summary judgment in their
favor as to Count VI of the amended counterclaim/third-party complaint. Dkt.
No. 120.
The court GRANTS the sales representatives’ motion for summary
judgment (Dkt. No. 121).
The court DISMISSES Counts I, II, III, IV, V, VII, VIII, IX and X of the
amended counterclaim/third—party complaint.
The court will allow Count VI of the amended counterclaim/third-party
complaint and Count II of the amended complaint to proceed to trial. The court
will schedule a separate hearing date, to discuss with the parties trial
scheduling issues.
Dated in Milwaukee, Wisconsin this 30th day of September, 2016.

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